Until now, homebuyers in India faced perennial problems of delay in delivery of projects, paying charge for space outside the four walls, major maintenance expense soon after purchase and a list of other issues. The new Real Estate Regulation & Development Act, 2016 (RERA) is expected to address many of these concerns that leave homebuyers frustrated and make builders more accountable. Consumer confidence could get a boost and help revive the real estate sector with the implementation of the real estate law from May 1. Builders and real estate agents are also likely to be more watchful as the new laws assure buyers of timely delivery of projects.
Here's how the real estate sector could change with the implementation of RERA:
RERA will bring a breath of clean air in the sector if state governments implement the Centre's policy as it is. Buyers often have a web of questions when it comes to buying dream homes. RERA promises to end that anxiety. All relevant information will be parked with the regulator and, hopefully, made available to potential buyers. It will also set timelines for projects, which means that the endless wait before moving in will soon be passed. But a large section of developers feels, and rightly so, that projects are not always delayed at their end. The red-tapism in government offices also affects delivery time. But the move will ultimately boost buyers' confidence and bring buoyancy back in the sector.
'Impact ongoing projects'
The two apex bodies of real estate developers-CREDAI and NAREDCO-feel that the implementation of this law will bring paradigm change in the way Indian real estate sector functions. "It's a paradigm change in the real estate sector. It will protect buyers who have purchased flats in the past. The regulator under the RERA should find ways to help complete ongoing projects and provide relief to home buyers," NAREDCO Chairman Rajeev Talwar said.
RERA will increase transparency in the real estate sector and boost confidence of both domestic and foreign investors but there can some problem initially in implementation of this law. Some experts believe supply could dip during the year as real estate developers come to terms with the law but demand will improve as buyers will have increased confidence to invest in property market. Prices could also remain stable as the sector becomes more transparent.
Buyer's can't be taken for ride
Unscrupulous smaller builders or even larger organised developers will not be able to take buyers for a ride anymore. The buyer will pay only for the carpet area (area within walls). The builder can't charge for the super built-up area, as is the practice at present, where you get 900-1,000 sq. ft. carpet area if you book a 1,300 sq. ft. house (the rest is balconies and common spaces). The new law is expected to stop this practice.
Investor confidence will return
Anshuman Magazine, Chairman, India and South East Asia, CBRE, said, "In the long run, we feel that the establishment of a regulator will prove beneficial for the sector. With investor confidence returning to the sector, resulting in greater institutional capital inflows in the long term, we can expect to see the segment in revival mode."
However, he said the developers may be cautious initially about announcing new launches till they get a proper understanding of RERA's various components. According to Tata Housing's Head of Marketing Services, Rajeeb Dash, unorganised or small developers will find it difficult to manage their businesses after the implementation of RERA.
(WIth PTI inputs)