Five years after the enactment of the Real Estate Regulation Act (RERA), the law much-needed has not only transformed the real estate sector but is also becoming the force it was meant to be.
The law, which became a reality in the first week of May 2016, has acted as the biggest catalyst in giving a formal structure to the real estate sector in the country and has allowed the property buyers to get heard and address their concerns and complaints.
RERA has brought in the much required standardization in the industry, it is bringing more trust from all the stakeholders. For example, it has clearly defined what the carpet area means and how to calculate it. It has thus removed ambiguities involved in the measurement of the carpet area and reassuring the trust of the home buyers in the process.
It has also reassured the buyer that the money he/she has invested for the purchase of a home in an under-construction project would be utilized for the completion of that particular project. As per the RERA guidelines, builders must open an escrow account and deposit 70% of the money collected from buyers into it and withdraw money from the account only for buying raw material for that project only.
The provisions of the RERA require the builders to update on regular intervals about the construction status of the projects, which instills confidence among the buyers of property in the projects.
"As we look back at five years and how RERA has performed, I think it has been helpful in establishing mutual trust among the buyers and the builders. It has also brought in a lot of discipline among the builders who now have to give timely updates on construction to the authorities. In a way, RERA certification to any project makes it a branded product," said Pradeep Aggarwal, founder & chairman, Signature Global Group; chairman, ASSOCHAM, National Council on Real Estate, Housing and Urban Development.
Although RERA became a law after the Bill was passed by both houses of the Parliament and a notification issued by the central government, it was for the states to set up their own RERA Authorities. Some of the states were slow in setting up RERA authorities in the beginning but have now embraced the game-changing law. As many as 30 states/UTs have set up Real Estate Regulatory Authority and 28 of them have set up Real Estate Appellate Tribunal as mandated under the law as of April 2021.
"Property buyers are more inclined to buy RERA registered projects as the judgments and decisions taken by RERA over the years gives them confidence. The authority does not only ensure customers are satisfied but also safeguards builders' interest. Developers also are at an advantageous position as they can procure project finance relatively easily if the project is registered with RERA," said Prateek Mittal, Executive Director, Sushma Group.
Even the number of complaints taken up by the various state authorities has steadily risen over the last five years. Over 65,539 complaints have been solved by the Real Estate Regulatory Authorities across the country. This number was 48,556 until May last year. Some of the states like Uttar Pradesh were slightly slow to set up RERA Authority and take up a complaint of the buyers but now the state has topped in the number of complaints being duly addressed and then disposed-off.
"It is so heartening to note that rera has completed 5 years. It is a milestone initiative of the government that has brought much needed accountability and transparency in real estate. Serious and dedicated developers like us have benefitted from rera. But, the biggest winner has been the buyers who are now getting timely delivery and quality construction all across. I congratulate the Rera authorities on successful completion of 5 years," said Manoj Gaur, CMD, Gaurs Group and Vice President - North, CREDAI National.
RERA makes it compulsory for the brokers and property agents also to register with the respective state authorities. Over 50,256 brokers have been registered across the country with various state RERA authorities.
"The brokers often from the most quintessential part of real estate deal, be it in the primary market or secondary market. Their registration under RERA has ensured that all stakeholders of the real estate industry are involved which is a good thing in the long run," said Ankit Kansal, Founder and MD 360 Realtors.
Solving of complaints at the RERA level has also ensured that fewer cases go to courts, saving a lot of time and money for both buyers as well as builders.
"RERA Authorities are solving bulk of the buyers' complaints and this ultimately translates to much less pressure on the judicial system, as these cases would have otherwise clogged the courts which are already overburdened," said Kushagr Ansal, Director, Ansal Housing and President, CREDAI - Haryana.
The RERA has brought in much needed accountability and thereby transparency in the real estate sector. This will enable the country's property market to become a trillion-dollar industry in the coming decade, accounting for over 13 percent of the economy.