The Hits and Misses of RERA for Buyers and Developers/Builders

For Consumers - The buyers of real estate market have a high hope from the policy of RERA. They must understand that no policy is perfect and since real estate’s vertex is so huge, any strategy will have some few open ends. But, the good news is that when the states will be implanting them, it would try to fill in the minor gaps of the plan.

Hits

Misses

Strictness on timely possession of projects to the buyers.

Approvals under RERA is not subjected to timelines which may badly affect the buyer too due to his indirect dependency on the approval.

• The minimum amount a developer has to keep in the project’s account is 50% of the money collected from the buyers.

• Strict and transparent features of RERA may reduce competition leading to an escalation of prices.

• The defect liability period of five years will increase the quality of construction.

• Time gone in taking previous approvals will hinder builders to offer new projects. This will limit the option for the buyers.

• Impartial builder - buyer agreements for sale.

• Various dispute settlement forums and RERA Appellate Tribunal will bring fair and faster dispute redressal system.

• Transparency will increase and buyer won’t get influenced by false carpet area ads as carpet area will become the base for sale.

• Better controlled agent system will bring efficiency in the market.

• High perceptibility to the builder’s past and his track record.

For Developers/Builders - The government is tightening the screws in the real estate. Although RERA is making some ground rules for the builders, the complexities of the current and past deeds of real estate in India makes it a lot harder than it seems on papers to bring a cent percent transparent policy which is applicable in every situation.

                                     Hits                                        Misses

Good chance to omit the casual operators who are the major defaulters.

Multiple approvals lists may delay the possession, deterring the potential of RERA.

• The involvement of government is less and the entire process is easy, which makes it quite affective for the builders.

• No facility to get a fixed number of approvals which will get approved by the single window clearance.

• Due to the visibility in the works of the developers, government and buyers can segregate the good ones from the defaulters.

• Due to an escrow account, there would be an increase in reliance on the external capital.

• Reduction in the fund costs will lead to high investment in the sector.

• Unhealthy influence of joint-venture engagements.

Making a conclusion out of these facts would be injustice to the efforts made by the policy makers. The thing is, even though the policy has missed on some complex issues which will only be settled once each individual state specifies certain broad terms, it will still be considered as one of the most affective policies to come in India.

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