Real Estate Regulator will impact the way you buy a house
It’s been almost a year since the Real Estate Regulatory Act (RERA) was passed by Parliament. Since then we’ve seen the rules being notified by the central government and a few of the states, with a nationwide roll out deadline of 1 May 2017, which is not too far away.
Once the state regulatory authorities are set up, we expect to see information posted by developers on their websites . These might vary from state to state as their governments have framed rules which although follow the central government guidelines but have been tweaked as per their considerations.
From a prospective buyer’s point of view, the availability of developer and project information on a RERA website will be useful in many ways.
So far, a buyer’s primary source of information about a project was whatever that was revealed by the developer’s marketing campaign or other promotional material that might have been handed over to prospective buyers.
However, this information might be limited and in some cases not entirely accurate. RERA makes it obligatory for a developer to reveal a great deal of information about a project that ranges from land ownership details to sizes based on carpet area to delivery deadlines. This being besides clauses that broadly cover penalties for delays as well as a clear definition of how ongoing projects will be listed.
This is one clause which most prospective buyers will look at with keen interest. At present, there are hundreds of projects across the country in various stages of construction, and many among them are close to completion but still have unsold inventory.
We have, over the past year and more, seen a lot of end users actively considering buying into these ready to move unsold inventories. On 1 May when RERA gets functional, a question that will be on every buyer’s mind is whether the property they’re planning to buy is covered by RERA or not. The criteria of being listed under RERA might differ from state to state but a RERA listed under-construction project will sell out faster than a one that isn’t.
Going ahead, developer websites will see information as required by RERA being posted prominently. I expect projects that are RERA-complaint to generate greater buyer interest. In fact, in a year’s time or so, projects will be compared for RERA compatibility. A RERA compatibility index could soon become an important tool for buyers to refer to.
I expect the RERA roll out to impact new project launches positively. Buyers will have complete clarity about a new project, something that was always ambiguous earlier.
With funds marked in an escrow account and project sanction plans and clearances displayed and most importantly delivery schedules mentioned, buyers will feel more confident about investing.
With affordable housing getting a push from the government and being clearly defined now, we’ll see tens of thousands of new buyers entering the market. For these first-time buyers, the presence of RERA mandated details in a developer’s brochure or website will work like a stamp of approval from the government.
It’s interesting to note here that states such as Maharashtra, Uttar Pradesh, Gujarat, Karnataka and Delhi, which see regular launches of real estate projects and attract investor interest have been quick to frame RERA rules.
It shows their eagerness in regulating the real estate sector which in these states provide jobs as well as generate revenues for the government.
We have observed that in countries where real estate is regulated well, buyers take investing decisions much faster and with better clarity. Their decision depends solely on their willingness to invest, and is not based on a determination of a project’s or developer’s credibility, something that is taken care of by a law such as RERA. I expect this to happen in India soon.
Kanika Gupta Shori is chief operating officer at Square Yards