May 2017 – Page 2 – FindMyProperty

With RERA (Real Estate Regulatory Authority) coming into effect from 1^st May 2017/31^st July 2017, Real Estate sector is going to change a lot. Till now it is the most un-organized sector in India however it provides maximum GDP contribution and directly /indirectly most numbers of Jobs. It is need of time that with RERA coming into picture we should start moving towards professionalism /transparency in this sector which is most touchable /emotional decision of anyone life.

With this coming in effect, Consultant/brokers will also need to get a Unique ID number or registration number so that it is easy to track when needed by customer/builders.

All other financial decisions having one or another authority like SEBI/IRDA/RBI to control financial transactions or service levels but unfortunettly biggest financial and emotional decision of anyone life not having any authority from independence till now.

We all that this will bring stoppage to pre-launch / more financial control on money flow / utilization of project funds only in project/ more accountability and penalty if project is delayed beyond certain point but with all this, there will be impact on pricing/project execution / customer care/ financial planning of builders in both positive and negative ways….

Prices will go up after RERA implementation

After stabilization of RERA this is sure that prices will start going upside in all part of India and all new launches will have higher prices due to:

Delivery time of project will increase or atleast builders will start having more buffers time to safe guard them. Like Last month one project launched in Gurgaon with delivery time 5 years as written for customers.

Cover the delay period heavy penalty, so they have to increase their margins to cover this.

Now only established or serious players will be in this field and all non-serious or first timers will go away. With limited numbers of player and projects, slowly-slowing demand/supply ratio will be disturbed and demand will be more than supply and it will push prices towards upside.

Developer cannot withdraw more than 30% amount from the project(70% needs to be utilized for the project) so builders after selling initial stock will not be in hurry to sell more until they need fund for any new project.

With strictly banned on pre-launch, cost of projects will go up as mostly in India, builders after taking land and before starting construction used to have pre-launch or soft launch to recover the invested amount or have money for construction from customers instead of putting their own money or taking loan from any banks.

There is huge mis-match in definition of super area everywhere in India. For example in Noida/NCR, typically loading on carpet area is 20% to 40%. This gap is huge and now everyone has to follow same rules so builders who were putting more loading to show less costs will be trouble so they have to increase rates to cover this thing.

There is clause of Defect warranty for quality of construction and products which are being used so builders need to cover this defect risk or customer(s) going in litigation for construction quality. Covering of this cost will push builders to have more margin or bandwidth to recover this loss if any defect found in anything related to building.

In a relief for home buyers, Government has passed new laws RERA in real estate market. Here are 5 things you should know about the new rules.

State-level legislation
The states that have notified the rules are Uttar Pradesh, Bihar, Gujarat, Odisha, Andhra Pradesh, Maharashtra and Madhya Pradesh. While the housing ministry had last year notified the rules for five Union territories, the urban development ministry came out with such rules for the national capital region of Delhi. The other states and UTs will have to come out with their own rules and will have their own regulatory authorities. While 13 states have already notified, the minister said that others will also do so.
Both new building projects and ongoing projects will be subject to the laws, with the exception of certain projects that have already been completed.

Tighter selection of builders
Property Builders containing those who have ongoing construction are essential to register with their local state regulatory authorities in the next three months, and provide regular updates on the status of the building projects on the regulators’ websites. They will also must disclose details of correctly when property will be completed and how much money they have already collected.
Builders will be required to deposit 70% of the money they collect from probable home buyers into an escrow account that will only be used for construction purposes.

Penalties for delayed projects
If property builder has delayed a housing project they will now have to either refund amount they have charged, or pay interest on it till the home is delivered to the homebuyer. Home builders that break up the new laws could be restrained for up to three years.

No more early bird deals
Builders can now only advertise property and homes once they have received all the regulatory approvals.
In addition, builders will also have to enter a registered sale agreement if they collect more than 10 per cent of the home value at the time of booking the project.

Real estate disputes
In case of disputes, instead of going to civil courts, home buyers can now take their complaints in connection to their property projects to special real estate courts that will be set up in each state. This is aimed at speeding up the current redressal process.