MAY DAY! – RERA Revs Up Sentiment
There has always been a general percep tion, rightly so, that the real estate sec tor is skewed in favour of developers and that consumers are left with no recourse if they were to get a raw deal.The Real Estate (Regulation and Development) Act, 2016 was, therefore, well received by consumers who see the act as restoring the balance between homebuyers and developers. Industry experts say that this is one reason why consumer groups have vociferously opposed the subsequent dilution of the central act by many state governments.Leading constitutional and real estate lawyers say that state governments do not have the right to dilute an act of Parliament.Thus, they expect a roll back of the clauses diluting the central act.
“The purpose of Real Estate Regulatory Authority, or RERA, [to be established through the real estate act by every state government] is to make real estate transactions more equitable between the buyer and the seller and the whole process more transparent. Also, it makes both parties more accountable towards their respective responsibilities. This has been done by making it mandatory for the developer to disclose on line details like approvals received, court cases against the developer, any encumbrances on the project, layout plans, etc. It also mandates the developer to provide a timeline for handover of the project and imposes penalties in case of delay,“ Amit Oberoi, national director (knowledge systems) of Colliers International India, said.
Another benefit of RERA is that consumers can withdraw from the project in case of delay and the developer will have to pay back the entire amount along with interest. Importantly, the act mandates that 70% of the money received from consumers be ring-fenced and used only for the purpose of the development of the project.
Interestingly, the sale of apartments will now be made on the basis of carpet area, removing all ambiguity on the area of a flat.Also, the developer is accountable for any structural defects, for a specified time period, after the flat is given out for possession.Importantly, the law provides a forum for consumers to seek relief in case of a dispute.The sale process is evenly balanced between both the parties.
On the flip side, there may be a dip in new launches in the immediate future. “We ex pect a drop in the number of new launches for a short duration after this act is adopted by every state. We have seen a similar trend in developed markets like Hong Kong as well, where new projects fell sharply after the introduction of property regulations.This is because developers adopt a wait and watch approach to see how the authorities implement the new norms,“ Oberoi says.
“During this period, consumers will have limited inventory to choose and, in a few markets, there may be an increase in property prices with limited supply,“ Oberoi says, adding that there is little clarity on how projects will be revived in case the developer defaults and the authority takes possession of the project.
To make this a fair trade for all parties, even buyers will be penalized if they don’t make payments on time.
On a broader perspective, the real estate act and RERA are widely expected to make the sector professional and accountable.“RERA, which is due for nationwide roll-out in May, will not only change the way real estate works, but also benefit all stakeholders.It will protect homebuyers’ interest and help in building only such brands in the market, which are known for quality and timely deliveries. The regulator will also bring some consolidation between organized and unorganized players in the market, boosting the confidence of customers,“ Deepak Kapoor, president of Credai, Western UP, says.
“Once the processes and procedures are standardized, it will mean a total revamp of the realty sector. This will also lead to more funds from FDI into the realty space. The coming of RERA will not only lead to more sales across India, it will also do away with lengthy dispute resolution mechanisms and build the confidence of homebuyers. This law will not only help buyers get what they have been promised, it will also help real estate get an image makeover, which is the need of the hour. This will be a win-win situation for all,“ Prashant Tiwari, chairman of Prateek Group, said.
Overall, while this law demonstrates the good intent of the central government, the key lies in implementation of this law by each state and Union territory.
source : internet