All You Need To Know on the Impact of RERA in Real Estate Market

The Government of India put the Real Estate (Regulation and Development) Act (RERA), 2016 in act on 26th March 2016. All its provisions were in effect from 1st May 2017.

RERA on its own is a vast topic to discuss. But in this piece of writing we will try to focus on the impact of this Act on the Real Estate sector. Before that, let’s try to understand why there was a need of an act like RERA.

Why was RERA needed?

For long, home purchasers have been complaining that transactions in Real Estate were unbalanced and vigorously in support of the Developers as there was no separate governing authority to regulate the Real Estate sector.

RERA and government’s model code, mean to make a more impartial and reasonable exchange between the seller and the purchaser of properties, particularly in the primary market. It protects the buyers interest.

There was no document standardization, disputes in Developer’s favor (most of the time), less transparency & accountability. Hence RERA in each state will act as an adjudicating body for speedy dispute redressal and prompt good governance practices in the sector.

What is the impact of RERA on Real Estate with perspective of a buyer?

Some of the important compliances with respective to buyers’ interest in this act are:

·  70% of the amount for the project from the buyers has to be maintained in a separate bank account, to be utilized for the construction of the specific project only.

·  Notifying allottees about any minor expansion or change.

·  Consent of 2/3rd allottees about some other expansion or modification.

·  Consent of 2/3rd allottees for exchanging major part rights to outsider.

·  No dispatch or commercial before enlistment with RERA.

·  Increased affirmation on the timely finishing of projects and conveyance to the purchaser.

·  An increment in the construction quality because of liability on any defect for five years.

·  Sharing data on project design, layout, necessary approvals, sub-contractors, land title status.

·  The project should be Certified by an engineer, an architect and a chartered accountant in practice.

·  Formation of RWA (Resident Welfare Association) inside determined time or 3 months after dominant part of units have been sold.

These are some important aspects which as a buyer you will cherish.

Also, with this there will be a great deal of transparency with respect to carpet area. The act ensures that the buyer get the right information & the right property as promised by the Developer.

What is the impact of RERA on Real Estate with perspective of a Developer?

Wrong-doings of a specific few Developers had a major impact on the whole industry in large. RERA would bring more transparency in primary Real Estate home buying transactions. Developers would need to maintain the best corporate ethics for a long-term sustainability in the market. It would create a more trust-worthy relationship with the end-users for the industry.

With implementation of RERA, the costing in terms of construction quality and complying with all the legal requirements will increase, so the Builder has to plan in advance, strategise & ensure that its cash flow is maintained to ensure that the project is completed in the stipulated schedule.

What is the impact of RERA on Real Estate with perspective of a Realtor/ Property Consultant?

Yes, you are getting it right. Even a Realtor comes under the ambit of RERA to safeguard the interest of the buyer. To facilitate a transaction, it is mandatory for a Realtor to register themselves under RERA.

Because of this step a Realtor can’t promise any amenities or services which is not there or is unrealistic. The organization or an individual may face severe legal punishment if found in any such fraud. This step also filters out fly-by-night operators who usually act as a nuisance from a buyer’s perspective.

Some important provisions of RERA Act

To check any irregularities, there are certain provisions which every builder has to comply with. They are as follows:

·  Every project where the land measure exceeds 500 square meters, or the number of apartments proposed to be developed is more than eight inclusive of all phases, comes under the ambit of RERA.

·  For all of such projects, the registration with RERA is mandatory.

·  Promoter shall not advertise, market, book, sell or offer for sale, or invite persons to purchase without registering the real estate project with RERA

All states have set up their rules and regulation with respect to RERA. The basic framework of it remains similar to what is made in the central act (RERA Act 2016). An Online portal has been setup by the states through which buyer could cross check about the project.

Summary

RERA is a new begging for the Real Estate sector. The impact of RERA has been on a positive note for the industry as a whole as it regulates the system in a proper manner, thus bringing back the trust of buyers in this sector.

Though it would take some time to be fully implemented across the country, the Developer & the Realtor fraternity are ready to face the new challenge. RERA would enhance their growth potential, in terms of brand image, positioning, financially and the best part would be to attract top talent, who would pursue a career in the Real Estate sector.

It would also attract more FDI funds. Global Builders would step into India. Corporate houses from other industry would diversify in the Real Estate sector, thus leading to more competition as they follow their best practices in terms of administration, HR policies & work ethics.

This is definitely a big boost to develop a healthy relationship and trust between Builder and Buyer.