(An Article on Real Estate (Regulation &Development )Act, or RERA or RERA Act detailing its Objectives, Key or Salient features and its coming into effect or implementation from May,1st, 2017)
Real Estate Industry in the past few years has been passing through one of its difficult phases, since 2008. Probably, this phase has been the longest and most toughest. Reasons attributed could be many but most certainly 'transparency & credibility' in real estate have contributed hugely to the overall slowdown in the current phase. Stories of delayed projects, unfulfilled commitments, irregular charges, opaque dealings are galore. While reforms were needed at various fronts beginning land acquisition, approval processes etc., one of the important areas was setting up of Regulator & streamlining of real estate transactions and advent of Real Estate (Regulation & Development) Act, 2016 or more popularly known as RERA or RERA Act is an important piece of legislation and a game changer for Real Estate Industry. Much has been said and written about RERA or RERA Act since its coming into existence last year, it will be this year on it will truly come into effect (unless the Union Government decides otherwise deferring its implementation).
While one may debate on merits and demerits of RERA as it stands today, the effort to bring in transparency & discipline can not go unnoticed. RERA ushers in the era of transparency and mandates all developers of real estate projects i.e Residential &/or Commercial (developing over land of 500 SqMtrs or 8 apartments or more) including ongoing projects (wherein the completion certificate is not obtained on or before the notification of relevant sections i.ew,e,f May 1st,2017) should mandatorily register their projects with Real Estate Regulator of the concerned State before advertising/offering thru any medium or booking or selling. This registration entails a great deal of elaborate information to be placed,hitherto not required, in the public domain at the time of registration and also periodically till the completion of the project. A mere indicative list of information as captured below :
To bring back confidence, RERA Act puts in lot of obligations (apart from the above)on the developers from :
While there are many elaborate obligations cast on developers, intermedia-ries such Real Estate Agents have been specifically bought into the ambit of the Act. The purpose of bringing in real estate agents is to cast duties and obligations, avoid miss selling and consistency of services.
As stated in the preamble of RERA, one of the objectives of the Act is to ensure sale of real estate in an 'efficient and transparent manner and to protect the interest of consumers' and Act largely captures the same.
Such elaborate information being available, buyers will be in a great position to understand the developer, his track record, project, product and take informed decisions. As approvals and permits would be available online, it would be easier for the buyers to track the status of approvals. Also, status of the progress of the projects with schedule of implementation complemented with floor wise photographs, periodically, will give a clear picture of progress. Carpet Areas is big relief as it clears the net usable area available to the buyers.
In terms of parking of funds in separate account and to be released as a reimbursement (as the funds can be withdrawn by the promoter proportio-nate percentage of completion), may curb fungibility of project collections and ensure a financial discipline. Also, frequent changes in plans and consequent changes in the unit sizes may not be possible due to kind of consents required.
The information in the public domain is large and uninformed buyer may actually need professional help to decipher all that is available. Rights available to buyers and obligations cast on developers are enormous Further, it may entail a great deal of compliance and requirement of specialised professional skill sets to the developer and intermediaries for avoiding litigations and huge penalties.
At various levels RERA is skewed toward consumers, while it may be re-quired to be so, one can not turn a deaf ear to developers woes. Land litigations, long drawn process of approvals, unscrupulous investors is also a reality. These aspects need a greater elaboration and debate.
The disclosures and discipline may eliminate lot of arbitrary attitude in the industry. The slow down coupled with RERA may actually leave out lot of non serious players from the industry. It should be able to install confidence in the buyers and should spur sales. Construction risk averse investor may once again start seeking opportunities. RERA should improve overall governance & compliance standards. All this may attract much larger Foreign Direct Investment. As such 2016 has seen an upsurge in FDI inflows in real estate sector. Construction and Real Estate Industry is large contributor to the GDP and therefore should be all the more compliance driven.
Since last year, inspite of tough stand taken by Central Government, only few states have taken initiative in setting up of Regulator and in coming out with Final or even Draft Rules. Unless, Union Government has any intention of deferment,RERA stands as a reality and need to be implemented. There could be various aspects of RERA which may bring in a further slowdown on a short term basis but most certainly its is a winner in the long run. RERA may not be a perfect ACT -1, but certainly a great SCENE -1.
Mr.Venket Rao, Founder & Chief Executive of Intygrat Business Advisory (P) Ltd has over two decades of rich experience in the areas of management, finance, regulatory compliances, secretarial & legal. Over the years, Mr. Rao occupied senior man-agement positions in industry and spent over a decade in Real Estate Industry and is widely popular in real estate circles. He is a Graduate in Arts (English Hons) from Madras University, Chennai, Associate Company Secretary from ICSI, New Delhi, holds Post Graduate Diploma in International Business from Indian Institute of Foreign Trade (IIFT) and Licentiate of Insurance from Insurance Institute of India, Pune. He has served as Member of the Managing Committee of PHD Chamber of Commerce & Industry and as Director with Delhi Stock Exchange. He was on vari-ous committees of PHD Chambers & Delhi Stock Exchange .He has been on various panel discussions on Real Estate & Capital Markets.He is currently member of Capi-tal Markets Committee of PHD Chambers.
The views and opinions expressed in this article are of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author– and, since we are critically-thinking human beings, these views are al-ways subject to change, revision, and rethinking at any time.
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