A new report by Boston Consulting Group and Omidyar Network India assesses the prevailing status of RERA implementation and recommends solutions that can meet the goals that the Act
Five years after the Real Estate (Regulation and Development) Act, 2016 was enacted, the sector has seen improved transparency, developer compliance and customer confidence.
A new report by Boston Consulting Group and Omidyar Network India assesses the prevailing status of RERA implementation and recommends solutions that can meet the goals that the Act set out to achieve based on the perspectives of over 1,300 stakeholders in the real estate ecosystem, including consumers, developers, real estate agents, industry body representatives, financial institutions, and architects.
The key takeaway is that RERA has successfully addressed many former challenges in the sector. However, several pain points persist due to varying levels of implementation across states.
These can be addressed by focusing on driving consumer awareness and education on RERA, streamlining processes, and driving adherence across states, taking steps to promote the real estate sector, and enabling policy level shifts.
According to the report, 76% of consumers who are aware of the law affirmed that they would buy only RERA properties in future, 64% of consumers are more likely to invest in real estate post RERA implementation. About 70% of consumers are aware of RERA, however, awareness is limited to its top few benefits and 77% of projects are RERA registered. There is higher compliance in metros and tier-I cities and 45% of developers have reported dissatisfaction with the RERA website.
“Nearly 70% of the states have a basic RERA setup. There are seven states that contribute to over 90% of the total number of complaints resolved by RERA authorities with Uttar Pradesh, Haryana, and Maharashtra falling in the top three. To enable transparency and reduce information asymmetries, 27 states have set up web portals, with information available on 110 parameters for the registered projects. However, awareness of the websites continues to be low," said Neetu Vasanta, managing director and partner, Boston Consulting Group.
There are six states and Union territories who are yet to set up the RERA authorities. Among these, Nagaland and West Bengal are yet to notify their official rules under RERA, which is the first step that needs to be taken by each state as per the central mandate.
While RERA has emerged as the forum of choice for consumers, long resolution timelines are a cause of dissatisfaction, Vasanta added.
For pre-RERA initiated projects, only 10% consumers expressed satisfaction while for post-RERA initiated projects, 30% consumers expressed satisfaction.
The estimated market size of the real estate sector is expected to touch $1 trillion by 2030, the report said.
So far, 65,202 projects have been registered under RERA, 51,303 property agents have registered themselves and 67,681 complaints have been disposed.
With 29,510 projects, Maharashtra has registered the highest number of projects under RERA, followed by Gujarat and Karnataka.
There is limited data availability to evaluate the level of efficiency across states. Less than eight states report the total registered complaints in their performance reports or on their respective websites, thus making it difficult to assess the overall effectiveness of state RERA authorities.
The report makes recommendations on how RERA can be better implemented, including fast-tracking processes and driving compliance and transparency across states.
It also suggests creating broad guidelines or options on the role of RERA for stalled projects, defining the interface between RERA and other authorities to facilitate faster approvals, state RERAs enabling data visibility on approval lead times to help streamline processes.
State RERAs can also leverage best-practices to digitize the end-to-end registration process, adopt quick authentication tools such as QR codes to scan for registration. State RERAs can levy higher penalties on developers for non-compliance, the report said.
Shilpa Kumar, partner, Omidyar Network India said, “An average Indian household maintains 75% of all its assets in real estate. Combine this with the fact that 66% of civil cases in India are on land and property disputes, and it is obvious that RERA has a critical role to play. Our report shows that in the last five years, RERA has begun moving in the right direction, increasing consumer confidence in the real estate sector. However, the report also points to need for more focus on greater consumer awareness, better RERA websites and focused grievance redressal to further improve consumer confidence in the sector."
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