RERA is the Real Estate Regulation (and Development) Act, 2017 and many states have started notifying it. It is intended as a buyer-friendly measure and had been in the news for quite some time. A lot of home buyers and property dealers and carefully studying the act to what impact would it have on them. RERA is introduced to introduce some amount of consolidation in the real estate sector. But the act is not all about protecting the property buyers and some provisions in the act are also in the favour of the developers.
Earlier developers would put in huge sums of money in the advertisement to attract buyers but there was no way to ascertain as to who is honest and who is not. This often results in honest developers not getting enough visibility. This would not be a case under this act as developer information would be public and buyers can see beyond advertisements. For quite some years the real estate business was not picking up steam but with stricter provisions to complete work on time buyers are expected to come back into the market. Another unintended impact of RERA is increase in the cost of the property because it will get costlier for developers to comply with the act. Thus, the burden of this cost will shift to the buyer and hence the more money would be paid by prospective property buyers. Earlier refund in 60 days was a clause if the project was not completed on time but developers are not backs with instant liquidity and all their money goes into construction. In fact, there will be strict monitoring of money under the RERA Act through the escrow account and 70% of the buyer’s money will be put in these accounts which only be used for construction purposes. With the coming of the RERA Act, the prospects of small players are going to diminish as either they are going to merge or be taken over hence increasing the prices of real estate as there will be lesser competition.
Other significant changes that the act brings are the setting up of the regulatory bodies and appellate bodies to solve dispute between buyers and seller within 120 days. Strict regulations will be imposed on promoters to complete construction on time. Buyers will be only required to pay for the carpet area (area within the walls) and not for any super construction outside the walls. Developers and agents will have to get themselves registered with regulators and get all their projects registered which involve more than eight apartments.
It totality is a welcome act that benefits both the buyers and the sellers. Much, more importantly, it brings transparency to the market and hence gone are days when buyers would regret their real estate decisions. The real estate sector can now realise its full potential.