It has been one year, since the Real Estate (Regulation and Development) Act (RERA), came into effect on May 1, 2017. In this period, different states have seen varying results, vis-à-vis the implementation of the Act and the rules thereunder. While some states have been proactive in setting up their respective regulatory authorities, others are still in a trial and error stage. Consequently, many home buyers, who have failed to see visible changes on the ground, are questioning the legislation. The developers, on the contrary, feel that the RERA has already identified the challenges and brought in transparency. However, the debate continues, on the extent to which the law has managed to bring accountability and enhance buyers’ confidence.
“For me this the RERA is like battle of 1857. Those who fought the 1857 battle never got anything, but it helped those who fought for our freedom in 1947. So, similarly, maybe in future, after many trials and errors the RERA policies will be fine-tuned for the benefit of the common home buyers,” maintains Ratna Saloni, a home buyer in Kolkata. Buyers like Saloni may have come to this conclusion, owing to the fact that the market is yet to see any landmark judgement that could set the precedent for erring developers and instill confidence in the minds of property buyers.
Market situation after one year of RERA
- There have been fewer project launches and the focus has been on execution.
- Developers have tried to adhere to compliances, to avoid litigation.
- Relaxed delivery timelines for existing projects has granted developers an escape window.
- The market is yet to witness any landmark judgement that could set a precedent.
The developers, nevertheless, feel that the RERA has changed the market dynamics, in a short span of time. Anita Arjundas, managing director, Mahindra Lifespace, asserts that the RERA is India’s first serious attempt, to regulate an industry that has been perceived as less than transparent. A year into the implementation of the Act, we can sum it up as a year of transformation and volatility and at the same time, as one that holds the promise of new opportunities.
“Developers with a long-term outlook and good corporate governance, have been frontrunners in RERA-compliance. However, recalibrating to a RERA-regime, has resulted in a slowdown in launches, with greater focus on project execution and sales of existing inventory. Overall, the Act has improved consumer confidence and attracted institutional funds into Indian real estate, which is indicative of a positive impact on the sector in the mid to long-term,” she explains.
Ashish R Puravankara, managing director of Puravankara Limited, believes that 2017 was a turnaround year for the real estate sector. The RERA altered the dynamics of the market, where for the first time, the customer was in the driver’s seat, with access to data and information at the click of a button. This transparency boosted buyers’ sentiments and led to a rise in customer queries and bookings, he says, assuring that the future remains bright.
“The initial days were difficult for many in the sector and several fly-by-night operators had to shut shop. Hence, one of the most apparent impacts of the reform, is consolidation in the sector. The larger and serious players have emerged stronger and we are seeing more joint developments and joint ventures. These alliances will ensured better planning, implementation and management of projects,” elaborates Puravankara.
Can RERA protect home buyers’ interests in the long-term?
Nevertheless, the fact remains that the RERA has not yet bridged the trust deficit between developers and home buyers. Nikhil Hawelia, managing director of the Hawelia Group, attributes this trust deficit to ongoing projects. The regulators are conscious of the fact that too much of a forceful nudge, with the ongoing projects, could lead to more project failures and non-delivery, he reasons. The developers, who launched projects in the recent past, beyond their execution capabilities, need room to align with the realities under the RERA regime and deliver, he says. “In my opinion, moving forward, many of these developers will not be launching new projects alone. They will, instead, opt for JVs and JDs. Moreover, the regulators are unlikely to be as liberal with new projects, as they have been with ongoing projects,” says Hawelia. While one year may be too short a time, to expect big-bang changes from RERA in states where it is functional, home buyers remain hopeful that the situation will not be like battle of 1857, which bore fruits only in 1947.
(The writer is CEO, Track2Realty)