Billed as a new epoch in the history of the Real Estate Sector, the Real Estate Regulation Act (RERA) ushered the dawn of a long-standing demand for the real estate industry, a central regulator. Coming into force in 2016, this law not only transformed the face of the brick-and-mortar sector but became a strong force to reckon with.
RERA was largely created to ensure accountability towards homebuyers, usher transparency and establish a conducive atmosphere between real estate developers and homebuyers. The Act brought the much-required standardization in the real estate sector and was a significant sentiment booster for homebuyers whose interests were protected, and developers held accountable for unscrupulous and fraudulent activities. With its main interest being the stimulation of fair play in transactions and timely delivery of projects, RERA became an iron-clad regulatory authority that reassured the trust of homebuyers in the real estate sector.
A paradigm shift in real estate landscape
RERA was a solace for naïve homebuyers who didn’t have any inkling about the delivery of their dream homes and were apprehensive about seeing real estate projects mired in scams and getting stalled.
This stern Act came with clauses that made sure that homebuyers get adequately compensated with interest for every month of delay if the developer doesn’t hand over the property within the due date mentioned in the agreement. Builders were also liable for structural defects of the property for five years.
The provisions of RERA also required builders to maintain crystal-clear transparency about the status of construction of the project and factors such as calculation of carpet area to instill confidence among property buyers. It also required mandatory and legally verified information about projects from the builder which is further certified by the respective RERA authority. Moreover, it cracked the whip on unregulated developers by fact-checking the developer’s background, funding and construction quality and completion timelines.
The redressal mechanism for protecting end-user interests was a breather for all homebuyers as it understood and solved their grievances and ensured strict action on defaulters. In a nutshell, RERA obliterated shady real estate players and promoted healthy competition among genuine real estate developers.
Impact of RERA on the real estate sector
RERA had a profound impact on the foundation of the real estate sector. Serious and dedicated developers benefitted a lot from the act as homebuyers beelined for buying properties churned out by them.
Consolidation of real estate players and joint ventures in the sector blossomed. Transparency & credibility about real estate projects and deals increased, thus boosting homebuyer sentiments and paving the way for rationalization of property prices and home loan rates.
Investments in the property sector zoomed as HNIs, NRIs and mid-segment buyers put their money in REITs, residential and commercial portfolios hoping for better ROIs.
The Road Ahead
Today RERA has completed four years since its amendment. The real estate sector is in a much better place now than it was almost half a decade ago, in terms of transparency, trust of homebuyers and accountability.
However, there are states which haven’t been proactive in implementing the Act since they are still juggling with their technical know-how. Speedier alternatives need to be spelled out that can be beneficial for developers.
To make sure that RERA achieves its true objective, it is crucial to address the challenges regarding lack of responsibility in states like West Bengal, Nagaland, Sikkim, Meghalaya, where the act has still not seen the light of the day. Specific penalties need to be devised for authorities who display carelessness in implementing the Act and don’t comply with approved deadlines.
A uniform payment schedule needs to be formulated for homebuyers across states and a single-window clearance should be made to streamline the approval process and slash costs and delays.
On a closing note, one must admit that the fate of the real estate sector has changed even since RERA came into force. Though there were initial doubts about whether the Act can be implemented successfully since it was difficult to absorb the regulations of the Act at first, the regulation benefitted both homebuyers and developers. The RERA Act came at a time when homebuyers were in a dire need of a solid regulatory mechanism that understood their woes. Today, it has ushered a transparent and credible ecosystem that has helped the real estate sector stand firm and resilient even in the face of a pandemic.
