Inputs as provided by, Ashok Mohanani, Chairman and Managing Director of Ekta World
RERA is certainly a progressive and revolutionary legislation which will be a game changing proposition for the Indian real estate sector that has in the past has often faced with trust deficit due to more than one reason. The legislation which has come into being after lot of deliberation and discussions will pave way for a transparent and mature structure for the industry and thus enhance the credibility of the industry. This will provide much needed vibrancy and momentum to the entire set-up and ensure a smooth transition towards its next phase of growth. In fact, this very critical law literally holds the key to the future growth of the Indian real estate sector.
RERA along with other legislations and developments such as GST, Benami Transactions (Prohibition) Amendment Act, 2016 and REIT’s, will further increase transparency and reliability within the sector and thus eliminate the gaps and anomalies that existed between supply and demand. This in turn will create a much stronger market place where both buyers and developers will be more proactive in their approach. These measures will augur well for the industry that will witness a big boost in institutional fund flowing into the sector at competitive rates. Institutionalisation of funding in sector like real estate and infrastructure is imperative as it will go a long way in infusing much needed liquidity into the system to meet its long term financial requirement.
As RERA will clear the opacity surrounding the domestic real estate sector, and put in place a very conducive scenario for home buyers as well as investors who have often adopted cautious approach. The prime objective of the legislation is to protect the interest of homebuyers and ensure timely delivery of projects. The consumer-centric law prescribes compulsory registration of all ongoing and upcoming real estate projects, as well as penalties and punitive measures on developers who delay their projects. In fact, the legislation is considered to be one of the most consumer-friendly laws passed by the Indian Parliament. Under the provisions of RERA, builders will have to provide with all the details of their projects to the regulator. Besides, they will also have to furnish quarterly updates as regards the progress of construction. Earlier end buyers would be often uncertain about getting delivery on time but with RERA now, developers will be compelled to complete their project on time. Now as per the RERA regulation, builders will have to keep 70 per cent of money collected from home buyers in separate account. There are now provisions whereby developers will face penalty in case of any delay or any default on their part. All these steps taken by the legislation will empower the buyers in a big way.
The appellate tribunal will hear and act on all related grievances. The definition of carpet area will give clarity of what actually buyer gets and developer cannot temper the offered design otherwise he will attract penalty. The parking area now needs to be clearly mentioned in the agreement. By safeguarding interest, RERA will help change buyers perception towards developers and thus help hasten the whole decision-making process of buying. Last but not the least, even brokers have been brought within the ambit of RERA and any deviation would invite penal actions. This move will see the emergence of a new consolidated broking fraternity who plays a major role in the real estate business.
Even though RERA is end-user centric, it has got all possible ingredients to augment growth in the overall industry. The provisions in the act will help build a much transparent and organized industry which will undergo a distinct consolidation wherein reputed builders will be calling shots over those who fail to perform and live up to the promises. This will drive away unscrupulous operators from the market thus create a much credible market place where buyers will be much more assured of their buying decision and thus entail vibrancy to the market. For the developers, the RERA provisions will bring about lot of discipline in implementation of projects.
Besides, developers will now be able to focus on devising much better offering depending upon the market need. This approach to a large extend will eliminate the aberrations that often result in greater imbalance between demand and supply. In other words, the developers will be able to optimize their efforts and resources in a big way and help build a mature real estate business. All this will expedite the process of institutionalization of the industry and bring down the cost of finance for builders who all these years have often struggled for right kind of liquidity.