The expectation of more transparency and credibility in the real estate market as a result of RERA has helped metro cities retain buoyancy in property prices despite growing residential supply and waning buyer sentiment over the previous year. Buyers are likely to return to the market with fresh vigour following its adoption. However, a sudden increase in property values is unlikely unless the present stockpile is depleted.
Growing trust in the sector is projected to boost institutional finance, allowing access to price-competitive solutions. This, too, will result in a mid-term rationalization of home prices.
The higher expenditures associated with RERA registration and approvals are projected to increase compliance costs for realtors. This might result in a 10% increase in the final cost of the project. Other considerations that may result in a price increase for new projects include restrictions on cash flow from the escrow account, restrictions on the sale of open parking spots, and the necessity to transfer common areas to housing societies. Premium projects from well-known developers are likely to fetch higher costs, while the market will be free of fly-by-night scammers.
- The Real Estate (Regulation and Development) Act, 2016 is an Act of the Indian Parliament that aims to safeguard homebuyers while also encouraging investment in the real estate business. The Act went into effect on May 1, 2016.
- The purpose of this Act is to create the Real Estate Regulatory Authority to regulate and promote the real estate industry.
- To maintain project transparency.
- To safeguard consumers interests in the real estate sector and to develop an adjudicating system for quick dispute resolution.
- To give accurate information about the Builder.
- Make recommendations to the relevant government on issues connected to the growth and promotion of the real estate sector. The following are the main features of this Act:
- It established the State Real Estate Regulatory Authority as the government entity to which any builder(s) objections should be directed.
- This statute gives the real estate regulator control over both residential and commercial real estate transactions.
- This legislation requires developers to submit all information on topics such as project plan, layout, government approvals, land title status, subcontractors to the project, and completion timeline with the State Real Estate Regulatory Authority (RERA) and subsequently transmit this information on to customers.
- A developer who breaches an order of the RERA appeal tribunal faces up to three years in prison, with or without a fine.
- Currently, if a project is delayed, the developer suffers no consequences. Now, the legislation requires the developer to return the same interest as the EMI paid by the customer to the bank back to the consumer if the project is not completed on time.
- Without the buyer(s) express approval, the developer cannot make any alterations to the plan that was sold.
- Every project larger than 500 square metres or including more than eight flats will be required to register with the RERA.