investment – Page 6 – FindMyProperty

What is RERA?

RERA (Real Estate Regulation and Development) Act, The act was passed by parliament last year. RERA seeks to bring clarity and fair practices that would protect the interests of home buyers and also boost investments in the real estate sector.
RERA requires builders to submit the original approved plans for their ongoing projects and the alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilised, and the timeline for construction, completion, and delivery that will need to be certified by an Engineer/Architect/practicing Chartered Accountant.

How will RERA impact Homebuyers?

Some of the important compliances are:

• Informing allottees about any minor addition or alteration.
• Consent of 2/3rd allottees about any other addition or alteration.
• No launch or advertisement before registration with RERA
• Consent of 2/3rd allottees for transferring majority rights to 3rd party.
• Sharing information project plan, layout, government approvals, land title status, sub-contractors.
• Increased assertion on the timely completion of projects and delivery to the consumer.
• An increase in the quality of construction due to a defect liability period of five years.
• Formation of RWA within specified time or 3 months after majority of units has been sold.

The most positive aspect of this Act is that it provides a unified legal regime for the purchase of flats; apartments, etc., and seeks to standardise the practice across the country.

Which projects come under RERA

• Commercial and residential projects including plotted development.
• Projects measuring more than 500 sq mts or 8 units.
• Projects without Completion Certificate, before commencement of the Act.
• The project is only for the purpose of renovation / repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under RERA.
• Each phase is to be treated as standalone real estate project requiring fresh registration.

For those looking to invest in real estate, investing in a commercial property rather than residential can be a better option. Commercial property ensures higher return over residential, while giving a steady flow of income.

The difference between residential and commercial real estate, from an investment point of view is that rental yields are higher in the latter. In the past two years, residential real estate has seen more appreciation but it has peaked out. Office space continues to give better rental yields. In residential property, (annual) rental yields are around two per cent, while in the case of office space, it is eight to 11 per cent and picking up.

By investing in just one commercial real estate deal you have much greater income potential than one residential deal. Whether you invest in an apartment building, strip mall, office building, or multi-purpose commercial building, you have more rent coming in from more people in one location. Commercial properties can make between 6 and 12% ROI as opposed to 1 to 4% for residential properties. Commercial real estate leases are generally much longer. This helps with the stability of your cash flow.

Some of a commercial property’s value is based on its income generating potential, increasing the incoming of your commercial property can force appreciation. This is not possible with residential properties.

Once you take the time to understand the ins and outs of commercial real estate investing, it can be extremely rewarding both financially and personally. So, what are you waiting for?