RERA - or the Real Estate Regulation Act - has finally become a reality. Though there are still plenty of hiccups and it will obviously 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 foremost question in property buyers' minds is - should they wait until the RERA process is streamlined, or can they go in for home purchase now?
This is a fair and valid question. After all, buying a home is in many cases a once-in-a-lifetime event, and one which most people look forward to and plan for assiduously. At the present time, 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, and projects which seemed too pricey only a year ago are suddenly quite affordable.
Indeed, buyers have every reason to view this as a very favourable time for home purchase. Yet, the ongoing implementation process of RERA is giving them pause. In the past, we have seen that 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.
As of now, developers have been given until the end of July to register their projects under RERA. Likewise, real estate agent - who also fall under its ambit - are still in the process of registering under RERA. As already mentioned, RERA is a process and not an event. The process includes the remaining States falling in line and adopting the Real Estate Regulation Act in letter and spirit – and, most importantly for buyers, developers registering 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 31st July 2017, which means that they have a three-month window period in which they can register these projects under RERA. Meanwhile, buyers should only consider projects in good locations, by builders who are in the process of registering their projects under RERA. Only players with strong balance sheets and an equally strong reputation on the market will be able to see this process through and to prevail in the future.
One sound piece of advice for homebuyers is to check out the developer’s website, which should reflect the fact that they are actively pursuing RERA compliance. A builder's depth of credibility on the market has always been the foundation of his success - and it will be even more so in the post-RERA era.
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.
Only builders with sound reputations will remain in the real estate business. In the future, RERA will revolutionize the manner in which residential housing projects are planned, marketed and sold across India. Homebuyers 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.
At the current time, the safest bet for homebuyers is to turn their focus on projects whose builders have a strong reputation and track-record. It is these players who will eventually remain on the market, and are in fact gearing up for making their projects and businesses RERA-compliant as we speak. The others will wind up and their projects may either be taken off the market or rebranded under the auspices of these stronger players.
In other words, there is no need for aspiring homebuyers to wait for more clarity on RERA to emerge. It is certain that RERA will clean up the market - and it is equally certain that it is only strong, reputed developers will be able to do business in the future. The soundest strategy for buyers is to identify projects by these builders which are either complete or in advanced stages of completion, and make use of the very favourable market conditions existing now to close the deal on their dream home.
Kishor Pate, CMD – Amit Enterprises Housing Ltd.