Real Estate (Regulation & Development) Act 2016 will boost the morale and confidence of home buyers and will also enhance the credibility of builders, say realtors
The much awaited Real Estate (Regulation & Development) Act 2016 (RERA) has finally been implemented. The Bill was first proposed eight years ago. Since then it was stuck in the parliamentary proceedings. RERA will ensure regulatory mechanism for orderly growth of the Indian real estate sector.
The new Act also ensures to protect interests of home buyers and brings in liquidity in the real estate sector. It will fix developers’ accountability towards the affiliate authority.
The transactions in real estate and their respective proceedings involve lot of complexity and legal formalities. There has been many significant cases when commitment given by the builder was disrespected or possession dates were delayed. Builders could not be made accountable because of lack of any registered law.
This is when RERA will step in tobring transparency in the sector.
The registration of developers as well as real estate brokers has now been made mandatory and they are supposed to upload the project details on authority website or either disclose projects the detail to buyers.
Blueprint of the Act
State-level Regulatory Authority – The Act directs all states and union territories (except Jammu & Kashmir) to set up Real Estate Regulatory Authorities (RERAs) within one year of notification.
Registration (Section 20) – The Act chiefly entails that developers will have to register themselves with RERA and projects details like proposed area, number of towers and date of completion are made public.
Declaration – The Act requires mandate disclosures of the project and promoters with self-declared project completion timeline which is made publicly accessible.
The entire process will set transparency in the real estate market and hopefully restore the trust of the buyers.
“The Act will make realty sector more institutionalised and benefit organised players. The shorter timelines for a given project will ensure speedy and more stringent completion. Government authorities should also be made accountable for time-bound approvals,” says Dr Anil Jindal, chairman, SRS Group.
“It is important that the Act is a balanced version which is agreed upon by both buyers as well as builders. It is also of prominence to fix the accountability of approving authorities. The government processes involved in getting permission at times lead to delays in possession. Single-window clearance mechanism can be of great help in solving the problem of delay in possession. Such a system would also bring in accountability and transparency into the market and boost consumer sentiment and demand,” says Manoj Gaur, managing director of Gaursons India & president, CREDAI NCR.
According to Gaurav Gupta, general secretary, CREDAI-RNE chapter, “The Act has not taken into account the costs of project clearances and sudden market price surges of construction material or labour. The issue of single-window clearance has not been taken into account. It is also important that both the central and state governments jointly address the working of this sector to make it less bureaucratic and fairer. The Act could moreover bring ambiguity in provisions based on state laws and practices. There are some states which already have laws related to real estate. New regulator overriding the existing rules in these states may lead to conflicts in future.”.
“The Act is of great benefit to home buyers but then it still leaves room open for some unforeseen problems. The clause to keep 70% amount in escrow accounts is not rational according to many critics as this amount should have been fixed according to size of projects. However, this might have a short-term effect till the time developers have better structured financing options. Single-window clearance and rational grading of developers has become the need of the hour to help create an environment of quality in the sector. The Act however would promote fair play in the realty market with a better working environment for the entire sector. Buyer’s sentiments would improve significantly and industry will also grow with full confidence. With this we can expect that delays will be restricted and home buyers will get their homes within the committed time,” says Prashant Tiwari, chairman, Prateek Group.