RERA – A Game Changer In Real Estate Industry
RERA mentions that the developer should not over commit and deliver as promised but there are times wherein regulations change or material gets obsolete due to which changes are necessary and are in the interest of the customer.
Photo Credit : Ritesh Sharma
RERA is a regulatory body which is made to regulate the real estate space. It keeps the customers interest paramount and makes sure there is ease of flow of information. Developers must deliver what is promised, this is the key to RERA.
In the real estate space there are various factors beyond the control of the developer. RERA mentions that the developer should not over commit and deliver as promised but there are times wherein regulations change or material gets obsolete due to which changes are necessary and are in the interest of the customer.
By including red tape, the delivery process has been elongated for developers. As it is a capital intensive industry, developers will face increased cost escalations which they would keep to be compensated for. Although RERA is good for overall industry, it will make business very difficult in the space thus impacting the largest employer of the country.
RERA will surely create some turbulence in the industry which is not use to anybody regulating it. The overall supply will drastically fall as projects without the RERA registration number will not be able to advertise and sell in the market.
The overall compliance costs for the developers will increase thus creating an upward pressure on prices. This will lead to consolidation in the industry and will improve the overall unsold inventory in the market.
It is yet to be understood how quickly the RERA rules can be implemented by developers due to complex structures of operations. RERA will in the long run help improve customer confidence however it will be at a cost which will have to be borne by the customer.
Channel partners have also now come under the ambit of RERA wherein they will be held accountable for any misleading information which they might have given while selling a particular project. This is necessary as various customers have been misguided to purchase properties which were not delivered as promised.
We at Belmac are doing workshops to help our priority channel partners register into RERA. We are also training them to provide customers correct information while promoting Belmac Residences.
RERA is perceived to be a game changer for customers. RERA considers customers to be the main stakeholder in the industry. This has given customers the ability to not only chooses wisely which project to invest in, but also the power to get their money back in case of a default from the developer.
This will surely increase customer confidence in the sector as investors will now come back into the market and would like to look at real estate as a safer option to invest their surplus money in.
End users will find it easy to choose their dream home in the locality that they prefer without the worry of over stretched EMI payments due to delay of their dream home.
Overall RERA has streamlined all the other stakeholders to make sure that the customers interest are looked after and he gets his home along with the amenities promised to him in a timely manner.
Developers will find it challenging to comply with the rules as some of the rules are still not crystal clear. Due to multiple projects and various different micro markets, developers will find it challenging to comply with all the rules of RERA.
However, considering RERA is the need of the hour and will only increase the customer confidence, various developers are working to comply before the deadline. There are some very stringent rules such as the interest will be the same if developer fails to deliver and if the customer fails to pay on time.
This doesn't allow the developer to force the customer to pay on time which might adversely impact the delivery of the flat. There are cases wherein customers create litigation against the developer. In that case the developer has the most to lose as interest income will not suffice the cost of delayed possession.
Another rule which adversely impacts the developer is the liquidity crunch created as 70 percent of the proceeds need to be kept in a separate account and the developer can only do payments after having certificates from architect, CA etc.
This will unnecessarily increase the time taken to process payments which will impact developers. A minimum amount should have been exempt from certificates so that the process could have been faster.
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