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Be Advised, Home Buyers! Here is Why You Need to Check Your Builder’s RERA registration  |  August 12, 2017 News Desk New Delhi

The Real Estate Regulation Act (RERA) has spelt doom for the erratic industry. The objective is to hold the builders, who take customers for a ride, accountable for any inconvenience home buyers face&ndash and the builders are facing the music. The latest is that banks are denying loans to developers who are not registered under RERA. Hence, it is highly advisable that prospective buyers must check whether the builder they are buying their dream home from, is registered under RERA.


The Reserve Bank of India (RBI) had advised institutional lenders to deny loans to builders are not registered under RERA&ndash banks are taking the advice rather seriously. Banks have made the regulations strict to safeguard rights of home buyers. Banks are taking these steps to avoid delays in EMIs paid by developers. Banks are also demanding collateral property before approving loans.


Under RERA, builders are not allowed to make unilateral changes in housing projects without the consent of the buyers. At least, the two-third majority of home buyers must approve the changes before builders can even slightly deviate from the original promise. This means that builders won’t be able to use money accumulated for a project in accordance with their whims and fancy. Builders are also bound to charge according to the real carpet area. Before RERA, developers were also including balcony and common area in carpet area.


Under RERA, it is mandatory that builders keep 70 per cent of buyers’ money in a separate account. To draw this money, builders will have to develop the projects in a systematic manner. This may ensure speedy possession.


Another reason for the buyers to look for only RERA-registered developers is that if any builder defaults on EMIs, it is the buyer’s credit score that takes the hit. Normally builders promise to pay bank EMIs until possession.


Apart from RERA registration, builders also need to conduct their own research into the track record of the builder.