The advent of RERA is not only bringing about the much-needed transparency in the business, but it is also significantly impacting the number of consumer complaints across the nation.
The real estate sector in India is one of the largest contributors to the economy in terms of GDP. As an employer too, it provides employment opportunities to a large section of society. However, since decades the unstructured and unorganized sector has been in dire need of steps to be taken to ensure transparency, protect the interests of buyers, and help attract investments in the sector. To address this challenge, the Indian real estate landscape has undergone a large number of regulatory and procedural changes in recent times. All these measures have been implemented to curtail fraudulent and unfair practices that are rampant in the sector.
A few such reforms are the implementation of GST, Benami Transaction Prohibition (Amendment) Act, 2016, Insolvency and Bankruptcy Code, and digitization of land records. However, the most key reform is the Real Estate Regulation and Development Act 2016 (RERA), endorsed to bring in efficiency and transparency in real estate. Its enactment can easily be termed as being amongst the most revolutionary measures undertaken by the Government to streamline the real estate sector.
The advent of RERA is not only bringing about the much-needed transparency in the business, but it is also significantly impacting the number of consumer complaints across the nation. As per the latest available statistics, the authorities of various states and UTs have resolved over 48,556 consumer complaints in the last year in comparison to pending cases above three crores during the same time. This has buoyed customer sentiments providing them with belief and hope that there will be now some resolution to their complaints. The improvement in transparency level has also helped India to shoot up its rank in World Bank’s ‘Ease of Doing Business Ranking’ from 142 in 2014 to 63 in 2019. The act has also successfully provided a conducive environment for REITs.
However, there remains scope of improvement in terms of improving transparency. The land and authority approvals are still a matter of concern as they remain in control of the state or central level bodies, leading to delays in projects during the initial stage. Some of these bodies are not responsive to the central regulator. The role of a financial agency as a stakeholder in the process needs to be under the act’s domain and the contractors involved in delivering the project should also be under its sphere.
RERA has been supporting the entire life cycle transparency from registration to property delivery. Towards that intent, every project of a developer is to be registered under RERA. Under its purview, a buyer is able to check the credibility of the developer before investing in real estate. All information about the developer – market credentials, financial strength, past track record, projects, unsold inventories, and pending cases – is available for public scrutiny.
Additionally, it is allowing the buyer to check the credentials of a project before investing. Whether it is the location of the project, its infrastructure, potential of occupancy, education, health or recreation facilities in the vicinity, these essential concerns are being addressed by the buyer before purchasing a property. It is also helping in reviewing the financing plan of a project which is aiding the buyer in identifying any disturbing signs in the developer’s cash flow, before any transaction being conducted.
From the developer’s perspective, this is helping in the validation of his ability to manage the delivery of the project as per the terms specified at his end. This includes details regarding amenities, site plan, master plan, floor plan, unit plan, utility spaces, and project sustainability mapped to the committed time, cost, and quality as per the project’s registration. This is enabling checking any discrepancies between the promised and actual deliverables.
Over a while, the act will be aiding in building the market assurance of a developer. The end to end successful completion and delivery of projects, recorded on RERA, will be augmenting the reputation of a developer in the business. Thereby, ensuring brand recognition, respect, and trust in both the stakeholders and buyers.
To attain the purpose of the act, we are collaborating with state RERAs to create a common open platform (COP), constructed on the principles of predictive analysis (data analytics). However, an effective on-ground inspection structure will help in enhancing its authority as a regulatory body. At present, there is a critical requirement to develop some teeth in terms of registering, monitoring, and controlling projects at the base level. This can be accomplished by setting up minimum standards and benchmarks equivalent to global standards to enforce quality in projects.
Due to the COVID-19 situation, it has become more important to ensure that inspection reforms include labour reforms. The establishment of an Apex Central RERA regulator can aide in achieving the prime intent by bringing together all RERAs to collaborate and contribute. The positive change in transparency has been limited to the relationship between real estate developers and the homebuyers, but homebuyers have now got a platform for redressal and relief through RERAs.
(By Nimish Gupta, MD, RICS South Asia)