When RERA was implemented in 2016, there was a mixed reaction across stakeholders but largely everyone was happy, especially customers because it meant complete restructuring of the sector, builders would be more answerable, there would be more transparency in transactions, more accountability and surely more efficiency. The otherwise extremely irregular and unorganized real estate sector saw a ray of hope and positivity.
A Structured Approach
With RERA, developers became more streamlined - registering their projects, providing all relevant information like project plans, approvals, and completion timelines, on the RERA website, and most importantly, adhering to timelines and commitments. This ensured that the buyer’s interests were safeguarded, thereby building their trust and confidence.
Financial Discipline
A very important development under RERA was having a separate ESCROW account, where the developer would deposit 70% of the project’s funds in a separate account and that money could only be used for that particular project and cannot be invested in other ventures. This helped in the funds being utilized properly leading to a timely project completion. This financial discipline enforced by RERA helped reduce unnecessary costs that occurred due to project delays such as labour charges, material costs etc.
No Misleading
With real estate practices becoming more uniform, developers have to follow the same rules for project details, carpet area measurements, and advertising. This has cut down on misleading ads and false promises, ensuring fairness for everyone involved. It has also streamlined dispute resolution leading to faster solutions.
Improved Investor Confidence
These stringent rules have ensured better governance, resulting in a huge boost in investor confidence. With clearer regulations, banks and financial institutions are also more confident in sanctioning loans to both developers and homebuyers. All this has contributed to a healthier and more reliable real estate market.
Long-term Impact
I truly believe that RERA implementation is a step towards long-term benefits and sustainable, ethical practices helping us build a more robust and resilient sector, which in turn is attracting more institutional investors and foreign direct investment, further boosting the market's growth prospects.
My Question
However, while RERA has brought numerous benefits to buyers, has it also posed challenges for developers? The stringent compliance requirements and financial regulations have increased the operational burden on developers. Smaller developers, in particular, are finding it challenging to meet these new standards, leading to a consolidation in the market. On the other hand, this has also led to the emergence of more organized and credible players, enhancing the overall health of the sector. So, what do you think? Is RERA a positive and encouraging move? Are the advantages heavier than the disadvantages for developers?
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