The much awaited, required and talked about Act - Real Estate Regulation & Development Act (RERA) was passed by the cabinet in May 2016 with all the 92 sections of the Act has come into existence from Monday i.e 1 st May 2017 with a promise of protecting the right of consumers and ushering in transparency but only 13 states and Union Territories (UTs) have so far notified rules.
The RERA will bring a paradigm shift in the way business is conducted in the real estate industry. Although the act has protected end user’s interests efficiently, the developers see a ray of hope under the section 7 of its rules which states that the extension of project registration demands for an explanation on the reasons for the delay. Here the builder can state all the reasons, even the ones involving sanctions, which has been a major block in timely delivery of the projects. There are two ways of looking at it from the developer’s perspective. One would be to bind the developers under strict adherences laid out under the policy, due to which the developers may suffer the initial hit, but on the other hand the act also promises that the concerns of developers will not be completely neglected.
Better product wins in post-RERA Market
The RERA Act holds promises for the existing buyers as well as the builders of real estate properties. This brings much smaller projects under the overall ambit of regulation as it has been brought down to 500 square meters or a minimum of 8 flats. This will also bring a lot of low cost housing projects under this and protect their interests.
Positive Impact of RERA on Builders
The real estate market that is plagued by overcapacity, this act will surely be a blessing in disguise. Builders are expected to benefit as higher transparency and accountability will improve institutional fund flow into the sector. The bill is expected to make the business more disciplined helping builders in the long term. It will also help builders not to get over leveraged as the money cannot be diverted and will be limited to projects. The sector is expected to receive more attention from foreign institutional investors given the improved transparency and better systems being in place. This help to attract foreign investments for government as well as for the builders which in line will provide the necessary fillip in the sector giving the strong grip for overall development.
Global Best practices – Great Help for Developers
While the Indian real estate market has been slow to adopt international standards, the industry is now more open to it because of RERA Act which will definitely improve transparency. Adopting global best practices, will help in reversing the negative perception of the industry as now real estate professionals in India will have to match up to global standards which will encourage international investors, who prefer to partner with technical expertise that is at par with international standards which is a good sign.
Committed and Customer Centric Brand- All that is required to succeed in RERA market
It’s good news for all those builders who have religiously been following this thumb rule. RERA promotes true customer-centric approach and investment in the customers, Builders will just have to expand their offerings more to address their clients’ needs and desires, and put consumers at the heart of all their decision-making which actually is the essential for any business. So to stay in the game, all players will have to recognize this, and make adjustments which in actual is a long term mutually beneficially association.