RERA has kicked in but the State govt. rules are yet to be released, although Karnataka was among the first to come out with draft regulations. By M.A. Siraj
The coming into force of Real Estate Regulation and Development Act 2016, termed RERA, from May 1, 2017 is likely to impact the real estate business in a big way. It brings regulation into a sector that had been making a huge contribution to the national economy but had remained unorganised with major handicaps for homebuyers. With enough teeth in place, it is all likely to eliminate the violators and the fly-by-night operators and enable consumers to go for quality products.
Aware of the large amount of checks and restraints against poor quality and default in terms of delivery schedule, the real estate industry has begun to take note of the provision of joint operation of accounts, need for transparency in terms of progress of work, commitment to quality and on-time delivery, and aligning with the stiff norms in terms of standards and measurements. However, several of the developers offer only guarded welcome as they are sceptical of the tardy official machinery measuring up to new challenges in terms of various approvals which generally cause delays.
Mr. Irfan Razack, Chairman and Managing Director, Prestige Group, terms RERA a transformational legislation on how real estate business is done. He says it advocates a completely different method of conducting business, starting from registration of a project after approvals before the launch to keeping 70% of the collections in a designated account meant solely for that particular project, timely completion and delivery, commitment to specifications, total transparency in terms of availability as well as a five-year warranty post completion.
According to him, all this and more will make the real estate developer that much more accountable and responsible to the home buyers and will eliminate the weak, the freelance and the fly-by-night operators, and will bring in overall professionalism and accountability.
It will also bring in a lot of consumer activism. These steps though, while protecting the customer, will have an impact on the supply and increase the cost of the product and lead to increase in the price, which the customer will have to bear. “While there is a lot of expectation overall, the expectation that the price of property will correct itself downwards is baseless”, he remarked.
B.N. Satish, Executive Director, Knight Frank, feels the RERA will lead to a more mature market as brokers will pick up only quality products and will be careful in dealing with customers. He says clear definitions of terms like ‘carpet area’ set the norms with great clarity, leaving no scope for ambiguity. Satish says the market is gearing up to put in place the required software as the law is stringent on transparency of transactions.
But Inder Bir Singh Sethi, DGM-Sales, Nitesh Estates, finds the non-announcement of rules under the RERA by the State Government mysterious. Sethi says some States have diluted the rules but hopes that the Karnataka will not follow suit.
He says Bengaluru is known for quality products and the State should ensure that it remained so. He expects the number of builders to shrink once the Act gets implemented.
Farook Mahmood, MD, Silverline Realty, and World President, FIABCI, says the RERA will have a positive impact on the real estate industry if the rules are implemented honestly by the officials concerned.
“The market down south in the country is fairly regulated and has not been known for fly-by-night operators”, he said while hastening to add that delays, if any, are not deliberate.
“They happen due to delay in official approvals,” he comments.
Mr. Farook Mahmood however says the Karnataka government’s silence on publication of rules is affecting businesses in the real estate sector.
He says realtors are in a limbo and cannot advertise their products / projects in various cities and areas due to absence of State rules.
While protecting the customer, RERA regulations will have an impact on housing supply all over the country and lead to increase in prices, which the customer will have to bear.