India has a vast population with needs regarding food, house and jobs on an ever-increase mode. The housing among these fields is one of the major ones. Thousands of people have grown to be rich and as many of them have made loss in real estate business. It is the one of the leading revenue generators for the government. Even though it has such strong presence in the country, it never had a regulating body. Due to the failure of the government to observe this, many people have become the victims of some scheming people doing the real estate business. We are not saying that every real estate project chooses unethical manner to sell their units, but lately, and lately here should be seen as a few years, this has increased manifold with the economy growth of India. The buyers who come from a middle-class background have time and again fallen prey to such petty real estate developers. There was a growing need to bring a transparent government body which can check the developers.
Finally, the government delivered by making an authority known as RERA which stands for Real Estate Regulatory Authority. It was passed in March 2016 by the parliament. This promises to bring a justice to the buyer through making strict policies that have to be fulfilled by the developers to sell their projects. The major problem that real estate in India is facing is that of the delayed possession given to the home seeker by the rich and the cunning builders. Thus, RERA will help people by bringing in a high level of transparency and discipline that these builders must have to follow. Specifically, RERA will check all the under-construction projects as maximum swindling is done in this phase.
Following are some of the risks that people face through developers:
- Selling of flats multiple times to different parties.
- Delay in giving possession to the buyer which happens due to various reasons and malpractices such as funding crisis, demanding additional charges in the name of facilities, reducing carpet area, changing the plans of the societies etc.
- The contracts made are one-sided in the favour of the developer, for example, a penalty of a massive 21% if one delay’s the payment even by a day.
Apart from these risks, the buyer has to unwillingly become a part of a major tussle between the developers and the government relating to the approval of the projects. Many a time, the builder takes the money from a buyer and then his project ceases at half completion due to not completing some paperwork or not getting prior approvals with the government. Thus, in some way or the other, the government also becomes a part of this deceiving process as they start the approval process after the builder markets his project leading to many problems.
The laws under RERA are still in the early days of development but one thing is for sure that there will be a huge relief for the buyers regarding developer-specific risk. The mechanism of RERA will be made such that it provides a common ground for both the buyers as well as the developers. Transparency is the key point regarding the rules under RERA as the government wants that every aspect of information that the general public should know should be made available on an informational portal. The regulatory risk will also be laid upon the developer as he will have to pay compensation if any mishaps happen while giving the possession of a unit. All the builders will have to register themselves under RERA which will see a low risk in the property business.
However, even though RERA will bring a new light for the people affected due to the immoral practices of builders, it is still not certain whether the price will go up in the coming year since as per sources, full implementation of RERA all over India will be completed till May 2017.