For the longest time, the Indian real estate sector remained largely unregulated. As a result, the industry experienced several challenges and irregularities, including defrauding homebuyers by developers, unfair trade practices, a lack of transparency, rampant use of black money, absence of accountability, and diversion of funds, among others.
In the face of grievances, stakeholders had little to no option but to seek remedy under laws like the Indian Contract Act and Consumer Protection Act. Recognising the urgent need for a regulatory authority in real estate, the Real Estate (Regulation and Development) Act was established in 2016.
Throughout its years of existence, the objective has been clear: to regulate and promote the real estate industry by tracking the transactions between builders and consumers of both residential and commercial projects.
To further regulate and monitor the industry and disputes concerning the projects, a state-level Act called the Real Estate Regulatory Authority (RERA) was introduced. RERA aims to check all the under-construction projects, eliminate unreliable players, maintain quality construction, and bring in stability by reinforcing the industry on key fronts like banking, indemnity, and security, ushering in a kind of paradigm shift in the real estate sector.
Heralding the next chapter of growth
Establishment of regulatory authorities in real estate has brought about a significant change, benefiting developers, consumers, and other stakeholders, in more ways than one. Here’s what RERA’s enforcement has done.
Expedited grievance redressal: The Act demands that the complaints have to be resolved within a period of 60 days after filing. A timeline like this never existed previously. This has pushed officers and tribunals appointed by RERA to provide a swift resolution to consumers’ grievances, boosting trust among property buyers.
Improved transparency: To maintain transparency in every transaction, RERA has directed developers to disclose accurate and comprehensive details like the project plan, layout, schedule, contractor, and legal permissions. This has helped property buyers make informed decisions.
Maharashtra leads the way
Standardised carpet area measurement: By making it mandatory for builders to mention the total carpet area and charge prices, RERA has standardised a countrywide calculation of carpet area, significantly diminishing discrepancies, and helping buyers compare multiple properties. This has also saved buyers from paying additional charges for common areas and balconies.
Timely project delivery: One of the biggest impacts of implementing regulatory measures in real estate has been on the project delivery front. Developers are required to follow the committed timeline and any potential delays in project delivery comes at the cost of compensation to property buyers. This has brought much-needed accountability among developers and a respite for buyers.
Swift transactions: The mandate of an escrow account has propelled builders to allocate 70% of funds received for a project with complete disclosures. This provision has ensured the funds get utilised for the intended purpose during the development process, averting diversion of funds, offering security to buyers, and speeding up project deliveries.
Evidently, the introduction of regulatory reforms has brought monumental transformation to the real estate sector in India. The rewards extend much beyond the aspects of accountability, transparency, and quality standards. It has emerged as a powerful tool for buyers to make sound decisions and developers to garner stage-wise, timely payments. All in all, the builder-buyer-investor-developer community has well embraced these regulations, collectively paving the way for growth of real estate.
The writer is founder and Managing Director, Maestro Realtek.
