Real Estate Regulatory Authority (RERA) has been a potent instrument in addressing some of the pertinent issues afflicting the sector.
Amongst them, most significant change has been ushered in completion and deliveries of projects.
What are the broad contours that the RERA has addressed?
Real estate sector is regarded as an unorganised and fragmented sector, marked by lack of transparency and lopsided builder-buyer relationships.
The implementation of the RERA Act with effect from May 2017 brought about marked improvements in the way the real estate sector operated.
This was noticed in issues like delays in completion/delivery of projects, skewed builder-buyer agreement terms favouring the developers.
Cash transactions, fly-by-night developers who had limited financial and operational experience were also curtailed in their operational domains.
Such issues increased consumer confidence, but the teething troubles coupled with the overall economic situation has slowed down demand in the sector.
Project Funds - Experts expect that the ability to execute will become amongst the key differentiators among developers in the real estate sector.
Therefore, it would be imperative for the developers to have the funding and other required resources in place to be able to execute the projects on time.
Contrastingly, a large part of the funding earlier essentially dependent on incremental sales as there was a lax time pressure on developers.
What are some specifics?
RERA has prescribed a model agreement that can be built upon by the respective states to bring about an equal builder-buyer relationship.
The presence of some of the penal clauses has also brought about a sense of responsibility amongst the stakeholders, especially the developers.
Disclosure norms as required under the Act, has brought in transparency.
While elevated prices and an uncertain business environment impacted the purchase decisions of consumers, RERA established certainty in the sector.
As builders are now being forced to ensure speedy completion of projects, consumer confidence to purchase unfinished projects has increased.
Challenges - Although the real estate Act is a step in right direction, some provisions have created an excessive fear in the minds of the developers.
Furthermore, issues such as under-staffing and non-streamlining of operations of the authority and tribunal will continue to impact developers.
Correspondingly, there has been a decline in new launches, which is not just due to the prevalent poor demand.
How does the future look?
For the long-term development of the sector, setting up of the requisite infrastructure for implementation of RERA is a crucial factor.
Currently, deviations of the state-specific rules from the central Act hinders the ability of the developers to roll out projects across the country.
Hence, some rationalisation is required across states – which will not only help developers channelize resources better but also boost buyer confidence.
The respective state governments will also have to play an important role and be proactive in improving operational efficiencies to nurture the sector further.
Notably, real estate sector is crucial for states as building infrastructure is indispensible to the overall business environment and the economy.
Political willingness and administrative efficiency will remain key attributes in the process of implementation.
