The Real Estate (Regulation and Development) Act (RERA) has finally become a reality. Although there still are plenty of hiccups and it will take some time for the industry to absorb all the facets of the Act, it should be kept in mind that RERA is a process, not an event. Meanwhile, the question in property buyers’ minds is: Should they wait until the RERA process is streamlined, or should they purchase a home now?
Buying a home is, in many cases, a once-in-a-lifetime event. At present, the real estate market in most cities is flush with options for buyers in most price brackets and developers have also kept various offers and schemes in place, to maintain the sales momentum. Prices have corrected in most locations.
Indeed, buyers have every reason to view this as a favourable time for home purchase. Yet, the ongoing implementation of RERA is making them pause. In the past, we have seen that the anticipation of price corrections and lower interest rates, keeps many potential buyers on the fence. Paradoxically, the announcement of RERA is now having a similar effect, largely because buyers are unsure of whether they will benefit from it immediately, or whether the benefits will take some more time to come in.
RERA’s impact on developers
Developers have been given until the end of July, to register their projects under RERA. Likewise, real estate agents, who also fall under its ambit, are still in the process of registering themselves. Several states still need to notify the rules under the Act and most importantly for buyers, developers need to register their projects under RERA.
None of these things can happen instantaneously, as many people had expected.
As of now, developers have been allowed to continue marketing their under-construction projects, until July 31, 2017, which means that they have a three-month window, in which they can register these projects under RERA.
Only players with strong balance sheets and an equally strong reputation, will be able to see this process through and prevail. In the months to come, we will see many small-time developers, who do not have the capacity or willingness to abide by RERA’s rules and regulations, vanish from the market. They will sell off incomplete projects or land parcels to bigger, established players, dissolve their real estate businesses and turn to other market areas. This kind of consolidation is a natural and expected by-product of RERA and one of the primary ways in which it will create a more transparent and healthy property market.
What should home buyers do?
In the future, RERA will revolutionise the manner in which residential housing projects are planned, marketed and sold across India. Home buyers will be able to stop worrying about lopsided sales agreements, delays in handing over their properties, unscheduled changes in building plans and several other risks, which were so far considered part and parcel of buying into under-construction projects.
Meanwhile, buyers should only consider projects in good locations, by builders who are in the process of registering their projects under RERA. Home buyers should also check out the developer’s website, which should reflect the fact that they are actively pursuing RERA compliance. The safest bet for home buyers, is to focus on projects whose builders have a strong reputation and track-record. In other words, there is no need for aspiring home buyers to wait for more clarity on RERA to emerge. It is certain that RERA will clean up the market and that only the strong, reputed developers will be able to do business in the future.
The best strategy for buyers, hence, is to identify projects by these builders, which are either complete or in the advanced stages of completion and make use of the favourable market conditions to close the deal on their dream home.
(The writer is CMD, Amit Enterprises Housing Ltd)