Real Estate: Will New RERA Regulations Usher In Buyer-Friendly Market In the Coming Times?
Prior to its introduction, the traditional real estate market was heavily skewed in favour of developers who could get away with charging unjustified rates, following fraudulent practices and exceeding promised delivery timelines
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The Real Estate Regulatory Authority bill or the RERA Act passed in 2016 has done much to advance transparency and rationalize the chaotic real estate sector in India. Hailed as one of the most revolutionary measures enforced by the Government, RERA has to its credit wrought an environment that is conducive to the fair and equitable transaction between developers and buyers.
Prior to its introduction, the traditional real estate market was heavily skewed in favour of developers who could get away with charging unjustified rates, following fraudulent practices and exceeding promised delivery timelines. These factors generally took a toll on the end user occasioning in the cases of most, financial and emotional turmoil leading to long and expensive litigation.
The RERA regulation seeks to fix these challenges by bringing in a standard uniform regulatory approach across the nation. The main agenda of the regulation is to protect the interest of the home buyers by bringing in transparency and accountability between the developer and the end user.
The new RERA regulations ensure a buyer-friendly market in the upcoming times with several benefits for the home buyers. The act has imposed restraints on the developer or promoter inhibiting them from practicing fraudulent activities thereby protecting the buyer. It has ensured a clear and straightforward environment by ascertaining developers share complete details of projects like layout plan, approvals and timelines in the public domain.
The act has made it mandatory for developers or builders to keep 70 per cent of the payment paid by the buyers in a separate bank account. This will ensure that the payment is being used for the construction of the project. Under the act, the sale of a property would be in accordance with its carpet area. RERA has also enforced an interest penalty on developers if there is any delay at their end in handing over possession to the allottee.
The developers or builders will have to abide by a warranty clause of five years once the transaction of a property is completed. Only those projects can be launched which have the pre-requisite approvals in place by appropriate authorities and are registered with RERA. This has amplified safety and assurance for end-users who can choose a developer basis a proven track record.
RERA has also helped the overburdened judiciary system in reducing the number of buyer grievances and complaints. It has made a significant impact in addressing the number of consumer complaints across the nation. As per the latest available statistics, the authorities of various states and UTs all over the nation have provided a resolution to over 48,556 consumer complaints in the last one year in comparison to cases in excess of three crores which were pending during the same time.
RERA not only brings the conduct of real estate developers or builders under its ambit but also that of real estate agents and brokers. Traditionally, agents and brokers who have been a part of the realty sector had no rules governing their behaviour. Since the objective of RERA is to bring transparency and accountability in the whole spectrum of functions and transactions of the realty sector, agents and brokers too have been included under its domain.
It has been made mandatory for brokers and agents to maintain information and details of buyers and display their registration numbers as evidence of their legitimacy to end users. Only brokers licensed by the state government can offer their services in the real estate market. These steps are sure to improve credibility and bring in the much- needed transparency and accountability to the sector.
The RERA regulation has put us on an equal footing with countries that have a set of minimum standards and benchmarks equivalent to global standards to safeguard the quality of projects. This means that the quality of a project is being taken care of in terms of design, execution, material specification and use of materials. It also translates into assurance for the customer indicating a responsive system is in place that will protect buyer interest.
However, the regulation lacks teeth as of now to be completely effective. We have been engaging with RERAs to suggest various regulatory and development focussed aspects that will equip it with the necessary wherewithal. Amongst them is the creation of a digital backbone, a common open platform (COP) to enable collaborative information management, single-window clearance system, grievance redressal mechanism and learning management built around competency frameworks that will assuredly heighten and ensure its efficacy and efficiency.Hopefully, the RERA regulation will also promote demand for qualified professionals who can embody professionalism, ethics and transparency at work and foreshadow the establishment of environment, health and safety standards in the segment for the workforce. It will also encourage foreign investors and attract global occupiers to invest in the country's real estate.