Is RERA a Game Changer for Indian Real Estate Development?
With the advent of May 1 came the Real Estate (Regulation and Development)Act or RERA designed to ensure the customer is king and the developers are brought to book. Expected to usher in an urban renaissance in Indian realty, which had suffered a massive blow due to demonetisation, the moot question here is whether RERA is indeed a game changer for the Indian real estate sector and developers as well as buyers?
Delving deeper into the real implications of RERA, which comes at an opportune time for real estate companies reeling from lack of funds and missed chances, let's see if the real estate sector will indeed benefit from this novel piece of legislation.Yes1. RERA part of the big picture
RERA along with demonetisation and the implementation of the GST (Goods and Services Tax) will ensure that end users dominate the market, not money-hungry investors. Genuine buyers for homes, accountability for developers and a clear, transparent sale and purchase process will be the making of the Indian real estate sector as RERA heralds a new era in housing and infrastructure development. 2. Builders and buyers both benefit
Prices have softened marginally following the demonetisation. With the advent of RERA, the parameters of accountability and transparency will be introduced in the real estate sector. Therefore, builders will benefit because there will be increased flow of institutional funds, and the home buyer who is the end user will benefit. 3. A real estate regulators
Another benefit is the setting up of a regulatory authority, which will protect end users from wheelers and dealers in the real estate sector. No fly by night operations will be able to survive the rigorous monitoring and tracking that the regulatory watchdog will be instilled with, thanks to RERA.4. Transparency
State regulators will bring in transparency and discipline with organised developers benefiting and passing on the gains to the consumers. Immediate benefits will impact consolidation, the manner in which capital is utilised and rising compliance costs for developers from the disorganised sector. 5. Fence Sitter investors set to act
With a demand uplift, consumer confidence will be boosted and investors who have been shying away from the realty sector will be back again. 6. Competitive for Small Developers
Medium and small developers will have to improve delivery capabilities as a result of RERA. FIIs will also be attracted to the market due to increased transparency and tremendous potential for growth.7. No more underdelivery of projects
RERA has hastened the speed at which developers are hastening project delivery. RERA can work under the umbrella of federalism and serve to be modified to suit state needs while central authorities have the regulatory control.No1. RERA will not be implemented in true spirit
Rules put forth by states have diluted the provisions, keeping ongoing projects outside the ambit of law. States like Odisha and Bihar may have followed the Center, but Haryana, the hub of Gurgaon, north India's corporate lifeline, has left out disclosures by builders regarding sanctioned plan, specs and layout at the time of booking the flat. 2. Gives developers an escape route
The omissions by many changed State implementations of RERA will give builders the upper hand, when it comes to avoid payment of compensation to home buyers. For example, Maharashtra has allowed builders to divest from the project once the occupancy certificate has been issued. The builder can push out an entire investment before common area, amenities and recreational facilities are provided therefore. 3. Relaxation even extends to capital city
The urban development ministry has relaxed rules in Delhi too, where rules saying promoters should provide details of court cases disposed of in last 5 years is allowed. Builders will therefore get away scot-free, not providing details of all pending cases.
RERA has changed the way business is done. But it has also been altered by the states. This has created a situation where the developer is the king, not the customer. In many states, a whittled down version of the legislation is masquerading as a breath of fresh air for the real estate sector. Unless the center takes charge, this powerful piece of legislation will remain a toothless tiger!