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To bring transparency to the home buying process, the Government of India passed the Real Estate Regulatory Authority (RERA) Bill in May 2016. Initially, only 52 of the 92 sections in this bill were notified in the RERA Act, but the remaining 40 sections also came into effect on the 1st of May 2017.
The Real Estate (Regulation and Development) Act was introduced by the Government to protect the interests of homebuyers in India and boost real estate investments across the country. Since its inception, the RERA Act has brought about a flurry of improvements in the real estate industry, such as better fraud protection, enhanced transparency about carpet areas, timely delivery of projects, and prevention of misuse of funds through a reserve account, among others.
That is why it’s always a smart choice to pick a RERA-registered property while buying a house or commercial space. The RERA Act is applicable in all Indian states and Union Territories. If you wish to purchase a RERA-registered property in India, you can avail of a Tata Capital Home Loan in a few simple steps.
The RERA act was essentially launched by the Government of India to protect homebuyers from the malpractices of unfair builders. It was also implemented to address the concerns of various stakeholders in the real estate industry, including buyers, brokers, builders, and real estate agents. The overall objective of the RERA Act is to eliminate the prevalent problems in the sector and bring about positive changes in every aspect.
As a result, numerous RERA communities have been set up by the Government across different states of India to oversee whether the rules and guidelines specified by the RERA Act are being strictly followed or not. At present, all builders and developers in India are mandated by law to register their projects with these state bodies for approval.
After the implementation of the RERA Act, there have been increased transparency and uniformity across the real estate sector. RERA has brought about several positive changes in different facets of the industry. Here are some key benefits of the RERA Act:
The implementation of the RERA Act has brought some radical transformations to ensure standardization, accountability, and transparency between homebuyers and developers. Below are the major upsides of this Act:
As per the Real Estate (Regulation and Development) Act, every state and Union Territory (UT) in India needs to establish its RERA regulatory body. No builder or developer is allowed to market its project without seeking approval from their respective state’s RERA regulatory body. As per the latest information available from the Ministry of Housing and Urban Affairs, around 30 states and UTs in India have set up the RERA authority bodies under the RERA Act. Below are the RERA details of some major Indian states:
As per the RERA Act, all builders and developers are required to register their upcoming projects with their respective state’s RERA authority. The RERA registration process is the same across all states. Below are the steps one needs to follow to register a project under the RERA Act:
Following are the documents required for registering a project with the RERA authority:
All builders and developers are required to register their properties under the RERA Act. Here’s how you can check if a property is RERA compliant or not:
Besides, you can visit the property’s website to check for the RERA registration ID. You can enter this ID on the official RERA website to get the details of the project.
Your home loan EMIs comprise two components - principal and interest. To encourage you to make investments in properties, the Government of India offers certain tax benefits under various sections of the Income Tax Act of 1961. These benefits are offered against the principal and interest components of your home loan EMIs.
Below are the tax benefits available for home loan borrowers in India:
Under Section 80C of the Income Tax Act, you can claim tax deductions against the principal component of your home loan EMIs. However, this deduction can be claimed only if you are repaying a home loan for a self-occupied property. The maximum tax deduction available under this section in a financial year is Rs. 1.5 lakh.
Section 24
Under Section 24 of the Income Tax Act, you can claim tax deductions against the interest component of your home loan EMIs. The maximum deduction allowed under this section in a financial year is Rs. 2 lakh. Again, you can claim this deduction if you are repaying a home loan for a self-occupied property.
Another important condition to avail of the tax benefits mentioned above is that the construction of your house must be complete. It means that these benefits are available only after the construction of an under-construction property gets complete or if you have purchased a ready-to-move-in property.
In addition to these, tax benefits under section 24 can be claimed only if the construction of your house has been completed within five years. In case the construction of your house takes more than five years to complete, you can claim a maximum of Rs. 30,000 only as a tax deduction against the repayment of the interest component of your home loan.
Investing in these projects can be an excellent way to ensure tax savings under sections 80C and 24. One of the advantages of RERA-registered projects is that you can rest assured of their timely construction. But in case the construction of a RERA project takes more than five years and you lose out on the potential tax savings, the builder of the project will be liable to pay for your losses as per the Act.
Let’s understand tax savings under these projects with the help of an example. Suppose you have taken a home loan of Rs. 80 lakh at 9% interest per annum for a tenure of 20 years. It means that the total interest that you have to pay on your home loan would be Rs. 93 lakh (approximately), and the maximum tax savings you can make under section 24 would be Rs. 40 lakh (approximately).
However, if your builder fails to complete the construction of your property within five years, you would be able to claim a maximum tax benefit of Rs. 6 lakh in 20 years. The difference of Rs. 34 lakh that you can't receive due to the delay in construction will be paid to you by your builder.
Strict penalties are imposed on builders/promoters and real estate agents for the violation of the RERA Act. The offenses and penalties are described in Sections 59 to 72 of Chapter VIII of this Act.
Below are the penalties imposed on builders or promoters under the RERA Act:
| Offense | Penalty |
|---|---|
| Non-registration of a project | Up to 10% of the estimated cost of the project |
| Providing false information about the project | Up to 5% of the estimated cost of the project |
| Violation of laws | Either 10% of the estimated project cost or imprisonment for up to three years |
| Severe non-compliance with RERA | The daily penalty of up to 5% of the estimated project cost |
Below are the RERA penalties imposed on real estate agents:
| Offense | Penalty |
|---|---|
| Promoting a non-registered project | Rs. 10,000 per day for default |
| Non-compliance with the Appellate Tribunal | Charged 10% of the estimated project cost or up to one-year imprisonment |
Know more about Home Loans
The maximum home loan amount that you can borrow from a lender depends on several factors, including your age, employment status, monthly income, credit score, and the cost of the property you are buying. With Tata Capital, you can get a home loan of up to Rs. 5 crore for buying a housing property in any of these projects across India. We provide financing of up to 80% of the property’s market value.
The interest rates levied on home loans in India vary from one lending institution to another. It usually ranges between 10% and 13%. At Tata Capital, we provide easy home loans for RERA projects at highly competitive interest rates, starting from just 8.75%* per annum. Furthermore, you can get the best deal on home loan interest with us based on your age, employment status, monthly income, and credit score.
The repayment tenure of your home loan is the period for which it is taken. The higher your home loan repayment tenure is, the lower will be your home loan EMIs. Usually, the repayment tenure of a home loan range between 15 and 20 years in India. At Tata Capital, we provide home loans for RERA projects with flexible repayment tenures that can go as high as 30 years.
The Real Estate Regulation and Development Act has transformed the Indian real estate industry. Since its inception in 2016, it has brought a flurry of improvements in this sector, such as better fraud protection, enhanced transparency, timely delivery of projects, and prevention of misuse of funds. All builders and developers in India are mandated to register their projects under the Act. Here are a few advantages of the act that have helped the real estate sector:
All these rules have helped in the tight regulation of the Indian real estate industry.
Investing in such projects has several benefits. You can enjoy complete transparency about the project’s construction and other details. Moreover, you can get a home loan for buying a property in a RERA-registered project with minimal documentation and at highly competitive interest rates. You will also be able to claim certain tax benefits on your home loan.
Lenders usually provide home loans for RERA-compliant projects with simple eligibility criteria and minimal documentation. Additionally, it eliminates the need for lenders to conduct hard verification of a property, and as a result, they can approve home loans quickly.
The implementation of the Act has ensured increased transparency in the real estate sector and the protection of homebuyers’ rights. As per this Act, all developers are mandated to disclose all relevant information about their projects, including the project layout, number of flats or apartments, carpet areas of different flats, and construction status, on the official website.
Additionally, the acts ensures that the developers provide timely possession of properties to homebuyers as per the sale agreements. In case a developer fails to provide timely possession, it may have to pay a penalty in the form of interest to the buyer. Homebuyers can even seek compensation from the developer for any losses suffered due to the delay in construction.
Last but not least, the act ensures an effective grievance redressal mechanism for homebuyers seeking solutions to disputes or grievances with builders.
Most lending institutions in India now provide home loans for RERA-compliant projects only. Such home loans usually come with simple eligibility requirements and affordable interest rates. On the other hand, providing a home loan for non -compliant properties is illegal. So, if your builder hasn’t yet registered their property under the Act, you must ask them to do so at the earliest.
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