The government of India came out with the RERA Act in March 2016 and all of its provisions came into effect from May 1st, 2017. This act has brought in significant changes to the Real Estate sector and has remained the way the various stakeholders, from developers to agents to home buyers, get involved in the business process.
What RERA aims to achieve?
For long, the real estate industry, for its scale and magnitude, has never had a regulatory body or authority to oversee the proceedings. This lead to a lot of confusion and the real estate purchase process was lopsided, almost always favoring the developers. So, first and foremost, the act establishes a regulatory body in each state and union territory in India to oversee the real estate sector.
Secondly, the act is aimed at bringing a very transparent and fair model of real estate operations in India. For too long, the processes of land acquisition, project development, and property sales have not been transparent enough leading to developers controlling the delivery timelines and property rates. Now with the act in place, this will not hold and developers will have to adhere to certain rules and regulations.
Some of the main functions of the regulatory body include – protecting the interests of various stakeholders, establishing a robust and active Redressal system and collecting data with respect to the industry in a repository. A major achievement has been the establishment of the Real Estate Appellate Authority (GREAT) as a forum for appeals.
How will affect the Developers?
First and foremost, developers will now have to register all their projects under the RERA Act. Since the roll-out in March 2016, the government had given all the developers’ time until the end of July 2017 to get their then current projects registered. Any new projected initiated by any developer will first have to be registered under the RERA.
Developers cannot launch or advertise about any project without first getting it registered with RERA. Also, developers cannot collect money from buyers for one project and use the same for another project. In fact, the RERA has made it mandatory for developers to place 70% of all the project receivables in a separate account. This amount from this account will be used only for that particular project.
Another interesting and a very helpful thing from the buyers’ perspective is that the developers have to keep the RERA body updated on the progress of the project on a regular basis. Continual disclosure on developers’ behalf will help buyers be aware of the progress of the project.
How will this affect the Agents?
All real estate agents fall under the RERA gambit and must get themselves registered to conduct any further business. Failing to do so could result in the revoking of the agent’s license. Agents will be expected to promote and conduct business only with RERA registered projects ensuring higher levels of compliance. Also, real estate brokers or agents will be made more accountable, going forward they will be expected to complete the buying or selling process within the committed timelines.
RERA Impacts Bangalore Real Estate?
Real Estate in Bangalore has seen some significant changes over the last two years since the RERA Act has been rolled out. For long, many home buyers experienced the pain of not having a transparent mechanism in place but now, that is no longer the case.
From the developers’ perspective, there was the initial pause and the real estate sector remained subdued for the most part of 2017. Developers needed to first understand and then comply with the required regulations and most of them focussed on completing existing projects to remain compliant with the RERA. But as time progressed, developers have moved ahead with completing existing projects and initiating newer ones bolstered by the buyers’ confidence and demand for housing.
From the buyers’ perspective, the RERA act has brought in the much-needed confidence evidenced by an increase in demand for apartments in Bangalore. In fact, over the last one year, there have been many apartments for sale in south Bangalore, and also in the north of Bangalore. Within south Bangalore, new projects have been taken up that has seen an increase in the number of flats for sale in Banashankari and Kanakpura road.
One thing to note is that the central government when it framed the RERA Act, has also given the freedom to institute a state regulatory body that will have its regulatory framework in place. The act was established to ultimately create a better real estate ecosystem and benefit the buyers or customers, who for long have been on the sour side of the bargain. The RERA will definitely create a difference in the real estate sector and bring a much-needed transparent purchase mechanism, provided the states and union territories do not dilute the provisions of the act.