Rera Poised to Bring- in More Transparency in the Real Estate Transactions
The Real Estate(Regulation and Development) Act 2016(RERA) came into effect on May 1st of this year. The idea behind the Act is to establish some ground rules in the sector to ensure transparency of transaction. RERA is by and large customer-centric and will work on making the sector a more organized one.The implementation of RERA is a boon to professional real estate consultants. A number of fly-by-night operators offer customers a range of cash back discounts and offers that are not created in conjunction with the builder. This often ends up with the customer losing money and not getting what he has been promised & finally loosing trust on Channel partners & Builders. With the transparency that RERA brings in, such transactions are no longer going to be entertained.
The sector will now be more organized and transparent in its transactions. The larger builder brands already function this way and they will not have to make any major adjustments. Those in the mid-sized builder segment will have to be more organized, transparent and disciplined in their approach going forward.
As of now, the industry has witnessed a sales slump in the past two years. After RERA coming into picture picture, there will be chances of a 2x increase in the sales tractions and a slight increase in prices as well. As borrowing rates for developers is on the higher side,future projects will have to work on the 70:30 model that RERA mandates.
This will take a little while longer to correct, as there will be a time gap in terms of new projects starting up, considering that the existing inventory has to be sold first.
We are still waiting for the Karnataka Government to come up with State specific laws. The expectations are that the bill itself not be diluted too much in the state laws that are made. This is especially if we are looking at the customer’s benefit.
Builders hope is that projects already on the floor are exempted from the RERA Bill. This is because it will become very difficult for the stake holder and the builder to on board an ongoing project and rework it to fit RERA’s requirements, as final property cost may increase, and this will affect the rate per square feet. But from the existing customer point of view, RERA has to be implemented for ongoing projects to safe guard their interest. It is right now a game of wait and watch in Karnataka.
CREDAI is currently in talks with the government to ensure that the laws are drafted with equal focus on customers and builders. Bangalore has always been a market that has followed professional standards with its real estate dealings, how ever, RERA will bring in a level of transparency that is much needed.
What is needed is that the State laws have to come in at the earliest, else there will be an ambiguity in the minds of customers on whether they are getting a good deal and benefits from the project as they are entitled to.
As borrowing rates for developers is on the higher side, future projects will have to work on the 70:30 model that RERA mandates
This will take a little while longer to correct, as there will be a time gap in terms of new projects starting up, considering that the existing inventory has to be sold first.
We are still waiting for the Karnataka Government to come up with State specific laws. The expectations are that the bill itself not be diluted too much in the state laws that are made. This is especially if we are looking at the customer’s benefit.
Builders hope is that projects already on the floor are exempted from the RERA Bill. This is because it will become very difficult for the stake holder and the builder to on board an ongoing project and rework it to fit RERA’s requirements, as final property cost may increase, and this will affect the rate per square feet. But from the existing customer point of view, RERA has to be implemented for ongoing projects to safe guard their interest. It is right now a game of wait and watch in Karnataka.
CREDAI is currently in talks with the government to ensure that the laws are drafted with equal focus on customers and builders. Bangalore has always been a market that has followed professional standards with its real estate dealings, how ever, RERA will bring in a level of transparency that is much needed.
What is needed is that the State laws have to come in at the earliest, else there will be an ambiguity in the minds of customers on whether they are getting a good deal and benefits from the project as they are entitled to.
