Finally REAL ESTATE in India, has got its first regulation in place the RERA act, which is likely to change the way the market functioned. A positive news for the home buyers, the RERA act brings in regulations which are likely to induce more investment and investor belief in the segment. Till date, Real Estate market in India was perceived to be an organized segment that was driven by the developers and the builders. With the RERA act coming into being, this segment will also transform itself into a consumer centric market.
The Real Estate Regulatory Authority (RERA) Bill should make home buyers really happy, as it brings about certain regulations that will now safeguard the money and interest of the investors. Although there have been a few retaliations regarding the act from the smaller builders, there are organized builders and developers like Indya Estates who support the act. The biggest relief that now comes to the home buyers is that the bill ensures every builder or developer completes the project as per the timelines committed by them during the start of the project.
The RERA Act was introduced in the parliament in the year 2013, and has finally come through. The Act was partially in force in the year 2016, however has now come into full implementation from 1st May,2017. So, if you are considering property investment, believe us there was no better time than now.
What’s in Store for the Home Buyers?
While there is a segment of people who feel that the RERA Act, is biased towards the consumer and unfair to the builders, home investors see it as a security which was lacking in the segment for so many years. Here are some of the key highlights of the Act that bring out the fairness that RERA will float in the Indian real estate market.
- Grievance redressal: The biggest drawback of the real estate market in India that existed for so many years, was the lack of a governing and redressal forum. RERA rectifies this drawback and brings into force regulatory bodies that need to be set up by every state to govern the development projects as well as act as a redressal forum to address consumer complaints.
- Systematic allocation of funds: For a long time, Developers collected funds from the property investors and used them to float newer development projects, causing unaccountable delays in the existing ones. RERA makes it a mandate for every developer to open a separate account wherein 70% of the funds collected from the buyers should be deposited. This money should only be utilized for completing the existing construction, thereby ensuring timely completion of projects.
- Better Transparency: The RERA Act, makes it a mandate for every builder to register the project whether it is a premium residential property or a commercial property. The registration would also include the list of facilities and amenities promised by the builder to the home buyer as a marketing activity. This rule is applicable for every property that has land acquired over 500sq. markets or consists of a building with over 8 apartments. This regulation keeps a check on the builder and a way to tally what is being promised vs. the actual deliverables. This again helps in ensuring that consumers get everything that they paid for.
- Clear Definition of area: For a long time now, the consumers have been paying much more in the name of built up area and carpet area. The confusion caused the builders to get the consumer to pay more than what they will get in the end as the livable space. The RERA Act clears out this confusion in black and white laying down a common judgment that every area of the house which is useable including the bathroom and the kitchen would be counted as the carpet area. The unorganized builders can no longer fool the consumer in this pretext. The consumer should now only be charged as per the carpet area and not the super built up area.
- Better accountability for the developers: As per the earlier laws governing the real estate in India, the builders were liable to repair defects in the building and structures for upto 2 years after transfer of the property. This seemed unfair, as the actual defects and repairs commenced only after 2 to 3 years of building a project. Hence, to make it more accountable, the law has now increased the period from 2 to 5 years. This helps the consumers get better quality of construction materials and makes the builders feel more responsible towards the projects they are building.
- Get all clearances in places: With the introduction of the RERA act, the Developers will be unable to sell any project without getting the required clearances. It is now a mandate for the builders to register themselves with the regulatory authorities and apply for all the required clearances for a smooth flow of work.
- Better access to information: The information so provided by the developers will be available at the RERA website for the consumers to access. This just means that consumers can now view the track record of the Developers, get clear details on the project and much more. There has never been a better act that has kept the interest of the consumer at the prime level of importance.
- Broker registration: The RERA Act also covers the brokers and makes it a mandate for all the brokers to be registered under the state regulatory authorities or the governing bodies set up under RERA. The buyers will have a more secured dealing with brokers with this regulatory move.
RERA from the Developer’s perspective!
If you have been browsing real estate websites, you may find a lot of information that clears out myths with regards to RERA Act. Renowned Developers like Indya Estates have welcomed RERA as progressive move that will eventually benefit both the home buyers as well as the real estate Developers. There is a fresh pump of energy that has been created around the real estate segment, as it is now likely to attract more investments as the buyers get some assurance about property investments. The law also has certain provisions that safeguard the developers against fraudulent buyers, scammers as well as payment defaulters. Hence, when the law is closely looked at, one can see a striking balance that works for both the buyers and the Home Developers. There is a more trustworthy relationship that will manifest now between the buyer and the developers with very less room for ambiguity and fear.
There is no doubt that RERA has been introduced to protect the interest of home buyers as well as to bring about an organized reform in the real estate segment. With structured laws coming in place, the efficiency is only likely to increase for the entire sector which will help in developing the real estate in India in a positive manner. Considering the fact that India is fast developing into a major economy, real estate business is going to thrive for years to come. But if there are not enough rules to protect the interests of home buyers, the industry is going to suffer. Therefore, it is a welcome move from the Central Government in the right direction. As a consumer there was no better time than now to feel more informed and empowered to take a through and thorough property investment decision.
Big companies like Indya Estates who have been complying with regulations, only get an added feather on the cap with the RERA certification. It not only promotes a healthy business culture but also attracts customer confidence which is the foundation of every business. Consumers are being educated using various media including social media about their rights and how the RERA act is a positive move towards consumer betterment. The monetary transactions which were earlier seen with doubtful minds when it came to real estate, will now be treated with utmost transparency.
So, if you are a consumer who has been pondering over the right time to investment into the real estate segment, it is perhaps the right time to channelize your investments towards this direction. Read more on the Act and you will be more confident about your investment. Investor education is also necessary so that every consumer is aware of their rights, which will only take the sector towards the line of progress.