Realty News

RERA houses the hopes of the real estate sector in 2018 and beyond

2017 wasn’t just another year that passed by; it was a landmark year in India’s history – one that can shape the foreseeable future of the real estate industry. Among the more significant developments in a year of reforms for the realty sector was the implementation of the Real Estate Regulation and Development Act, 2016 (RERA), which came into full effect from May 2017. RERA was welcomed warmly by consumers, who have viewed the real estate sector through a cloud of mistrust for many decades. Instances of delayed projects, and ambiguous project specifications in the past had left homebuyers feeling frustrated and helpless. RERA is expected to bring unprecedented levels of transparency into real estate projects and reinstate consumer faith in the industry.

RERA promises to safeguard consumer interests.

In addition to mandating developers to regularly furnish updated information about ongoing projects, RERA will go a long way towards avoiding delays in delivery. RERA will also allow for the speedy redressal of disputes between buyers and developers. Consumers will finally have someone to turn to, in case of any structural defect in workmanship, or issues with quality or provision of services and other obligations within the first five years of the agreement. Developers are required to rectifying such defects free of cost within 30 days of the consumer bringing it to their notice.

RERA will make realtors accountable.

The Act imposes strict rules on developers, aimed at protecting consumers from time delays and financial losses. All projects that are yet to receive completion certificates, or are yet to be launched, will come under the purview of RERA. Under RERA, a developer can only sell flats on the basis of carpet-area; and not at built-up and super-built-up rates. The developer is obliged to keep both consumers as well as the RERA authority updated on the project’s status on a regular basis. If the project is delayed, the developer will have to make good the additional interest that the customers will have to pay their bank. Also, the developer cannot make any changes to the original plan without securing permission from at least two-third of the people to whom flats have been allotted. These, and other provisions of the Act will help in weeding out unscrupulous builders, and allow the compliant ones to flourish.

There will be consolidation in the near-to-long term.

RERA will bring not only transparency and accountability, but also consolidation in its wake. Developers need to be sufficiently funded to be RERA-compliant. Many small and cash-starved developers may have to partner with larger, established players to survive. Moreover, unscrupulous developers – big or small – will have no place to hide. The real estate sector will be more organized, and probably have lesser – but larger and more reliable – developers in the years to come.

Positive consumer sentiment will revive investments in real estate.

Since the Act empowers homebuyers with new levels of protection and information, and a solid institution for redressal of issues, one hopes it will increase their confidence of investing in a home. This, in turn, should increase the demand for housing across the price spectrum, and encourage banks and lending institutions to introduce a larger number of attractive loan offers. The positive consumer sentiment could also rub off on Non-Resident Indians and interest them once again in buying properties in the land they left behind.

Looking forward to a good 2018

If the overall sentiment in the industry is any indication, 2018 will be a good year with increased inflow of investments, better regulation, ease of doing business, and accountability for all stakeholders. The effects of all the policies and reforms implemented over the past couple of years will finally yield results in 2018. Consumers will have the right to expect high levels of professionalism in the real estate industry. This will increase the demand for housing, and encourage fence-sitters to become homeowners soon. All in all, RERA holds the promise of organized growth for India’s real estate sector.

Demonetisation was a bliss for builders who were consumer driven

Business magnates, top industrialists and eminent investors have always believed in catering to consumers. Those who have transformed lives of people through various innovations and trustworthy projects have always sailed choppy waters. The same can be said about the Indian real estate sector.

The realty segment in India saw subdued response when demonetisation was announced last year. Scrapping of Rs 1000 and old Rs 500 notes sent the real estate sector into a sudden shock.

On one hand where developers were getting cold feet post demonetisation, few builders were immune to the announcement. Builders who remained unaffected by the note ban were majorly consumer driven, whereas investor driven had to face losses.

Investor driven builders suffered a setback as a painful demonetisation dried up the demand in the realty space, which roughly accounts for 7% of India’s GDP.

Most of the transactions are cash-based and the sector is considered best investment option for people to park black money. In majority of the transactions, sale documents don’t show the actual property price.

It is the cash-rich secondary market in India where investors engage in sale and resale, which plays a crucial role in fixing prices. Majority of the builders gave preference to those who paid 60% of the amount in cash and kept them ahead of the ‘white money makers’.

But, after demonetisation, the dynamics changed. Those with black money went into a tizzy and got busy figuring out how to account it. The Government’s crackdown on benami properties curbed cash transactions and thus, the note ban ‘cleansed’ the real estate sector.

In this clean-up exercise, builders such as Tata Housing and others remained unaffected as they were consumer driven. They have always focussed on consumer first, whether he/she can pay cash or not.

Builders who did not side-line the genuine buyers survived the heat and are now reaping benefits of government’s pro-industry and pro-consumer initiatives.

“Government has introduced a slew of initiatives and the impact will be seen soon. Builders who were consumer driven were hardly affected by the note ban. Coupled with RERA and affordable housing, genuine builders are going to lead the industry,” said industry expert Ankit Mahajan.

Demonetisation along with Benami Property Act and RERA will surely make real estate more organised, transparent, credible, especially for consumers.