With RERA in place, the home buyer community can now hope for a simpler and risk-averse journey. Here's how RERA has impacted the real estate market in India.
People do not invest in real estate for the sake of just returns, anymore. It is more of a end-use driven market now. Therefore, suffice to say, the property market is one which is never short of buyers with demand that needs to find its equilibrium with supply. Everyone wishes to purchase a home at the most opportune location, and that too at the most desirable price. However, skyrocketing price levels, and a difficult market wherein buyers’ rights were not so well protected, had left the community in a ‘to be’ or ‘not to be’ situation. There was little to no faith in the sellers operating in the primary market, because of the rampant malpractices. However, with the RERA in place, the home buyer community can indeed hope for a simpler and risk-averse journey.
Most buyers were concerned up until now about the perils and pitfalls of investing lump-sum dollops of cash in the real estate market, but that should change, owing to the RERA. Modalities of launching and operating projects have become much stricter. This also ensures that buyers are stuck less in hassles stemming from legal challenges in the post-purchase phase. Regardless of the micro-differences in the individual state authorities, the compliance towards RERA has been made a diktat for all states and the real estate developers and buyers operating within them. The finer attributes of forthcoming simplicities in the real estate market can be summarized as follows:
1. Ease of choosing the right developer
Buyers should not face as much of a challenge in identifying the right real estate developer. In the past, buyers had to heavily rely on real estate advertising platforms, which were heavily riddled with false communications and promises that could never hit the ground.
However, RERA has taken this aspect very seriously and no real estate developer can now come up with imaginary designs and lucrative features that used to remain a part of brochures only, to a large extent. The advertising needs to be realistic and developers are instructed to showcase the actual photographs of the projects under construction.
Also, no project could see the light of the day unless it is registered under RERA, after fulfilling the whole bunch of strict terms and conditions that protect buyers’ rights in every phase, be it pre-purchase, purchase or post-purchase. The standards set by RERA are rather a blessing in disguise for the serious industry players as there is hardly any room for ‘fly by night’ operators or unethical developers to enter the market.
Therefore, we can conclude that there will be fewer developers in the future – only those who could meet the stringent norms stipulated by RERA – and thus it will be easier for the home buyers to choose the best-suited one.
2. Provision of separate escrow account
RERA has ensured that developers maintain separate escrow accounts for each of their projects separately, so that the funds invested by buyers of one project could not be diverted to other projects, and that the buyers do not have to suffer due to a cumulative shortage on funds at the developer’s end.
The policies also stress that expenditure by builders from any of these accounts must be approved by the architect or engineer associated with the project.
3. Compliance is not a choice, but necessity
Builders are bound to play by the rules. Deviations from the proposed plan draw the ire of the Authority or the Appellate Tribunal these days, up to the tune of 10% of the project cost and/or up to 3 years of imprisonment. Provisions like these enforce a culture of mandatory compliance among the real estate builders. In the past, there was no such diktat keeping the builders from doing as they pleased.
Here’s a case in point: Out of the 60 rulings by the Maharashtra RERA, between 01 September and 06 December 2017, 79% decisions went in the favour of buyers. This clearly shows that the buyers’ interests are fairly-protected and of course the justice is delivered faster than ever.
4. Pre-launch and Soft-launch is extinct
The pre-RERA scenario saw developers promoting their projects way before it could materialize. This led to endless scenarios of misleading advertising, false commitments, and bait-‘n’-switch approach under practice. With pre-launches being outruled by the RERA, nowadays developers do not have the option of financing a project by advertising the projected outcome to prospective buyers. In the past, a lot of buyers have been hoodwinked by developers who have usurped the money handed over by the former.
However, all such practices are now history and the home buyers are very well-placed to take decisions confidently, knowing that there is a robust mechanism evolved by RERA to back their dream of owning a property they can call ‘home’.
(By Honey Katiyal, Founder & CEO, Investors Clinic)