Being unregulated and unorganised, the real estate sector earned a notorious reputation with many cases of money laundering, benami properties, stalled projects, and being controlled by fly-by-night developers with hidden agendas that used to turn a DREAM HOUSE for many into a NIGHTMARE.
Of course, much of this changed in 2016 and later in 2017, by which time all sections of the law came fully into force for governing the primary sale market.
With the Real Estate Development and Regulation Act 2016 (RERA) coming into force, there has been a significant impact on the uncertainties, malpractices, and trust gaps that have always surrounded the Real Estate Market as a whole.
The first question that arises is: if the act only benefits homebuyers, then what about developers?
The answer is that the act has many rules and regulations for builders and home buyers, protecting both their interests and thus resulting in a number of benefits for both parties.
Some of these are discussed below:
RERA has helped in streamlining the process for project approvals and registrations, which are mandatory for the promoter to obtain and upload on the public domain, i.e., the RERA Authority portal, which helps transparency from the home buyer’s point of view as they are not kept in the dark in many ways that used to be a common practise.
It increases the credibility of the builders, as now the promoter not only registers his proposed project with the RERA Authority but also needs to give out full details of the real estate project, which helps bridge the trust gap between both parties as what home buyers see is what he gets.
Penalty on payment defaulters
While the Act imposes a stringent penalty on developers in case of defaults, it also penalises the buyer for delayed instalments. Incessant payment delays despite prior notice empower the developer to cancel the booking and refund the amount to the buyer after deducting the booking amount and interest. Overall, the Act safeguards not only the rights and interests of homebuyers but also those of developers.
Better Project Planning and Execution
For any new project that gets registered with the RERA Authority, the promoter needs to give a completion date and detailed configuration along with other specifications of the project, which benefits the developer by having clarity on project costing as well as estimating funding capacity.
RERA aims to have financial discipline and accountability at every step of the transaction towards customers by promoters, which in turn benefits from a more stable and predictable market environment, attracting more investments and ensuring sustainable growth.
Another question one would ask is, Has the RERA been effective in Indian states?
The answer is yes; the implementation of RERA across India proved a game-changer, as 30 states and Union Territories have so far notified the act. As of 2023, around 99.3 thousand real estate projects were registered under India’s Real Estate Regulatory Authority (RERA).
Also, the current data shows that RERA project and agent registrations have increased by 109% in the last 3 years. The states with the highest number of project registrations are Maharashtra, Gujarat, Karnataka, Madhya Pradesh, Uttar Pradesh, Telangana, and Tamil Nadu.
Finally, over 1 lakh disputes have been registered under RERA, which aims to fast-track dispute resolution for transactions happening in the real estate sector.
Thus, the level of transparency, disclosure, and accountability provisions attracts more real estate investors. Consequently, RERA is likely to filter out the inexperienced, unprofessional, fly-by-night operators.