Developers took no cognizance and enjoyed their own sweet time to develop the project. Well, it seems the honeymoon period for the developers is over. Buyers now have a missile which they can shoot when cheated.
Dealing with Brokers:
In the current real estate industry setup, buying a house is indeed a horrendous journey which starts with contacting a broker. In pursuit of a genuine broker, we generally end up with an errant one who very skillfully misleads us of price, papers, project features, builder’s history and the completion date.
Selecting a Project:
We often come across giant hoardings shouting about some real estate projects with fancy foreign name and unbelievable features. ‘Be a neighbor to a Bipasha Basu’, ‘let your kid learn cricket from Gautam Gambhir’ and most recent ‘Coffee with Sunny Leone’ are some of the finest examples of these misleading advertisements. Moreover, developers often mislead on features as well like Italian Marble flooring, Modular Kitchen etc.
Signing the Sale Deed:
An only official document legalizing the sale and purchase of the property and base for transfer of ownership once the possession is handed over. It also contains the terms and conditions upon which the buyer and seller agree to complete the transaction. However, these deeds are mostly one-sided benefitting the developers only. it seldom specifies the delay penalty clauses for the developer in case possession is delayed. It also does not specify clauses for a sale of property or ownership in case the possession is delayed.
Getting the Final Possession:
Lastly, the big moment! Though in rarest of the rare cases you may get possession on time, the pain of transfer of ownership can spoil the mood. Also, developers do change the project layout without buyers’ consent and thus, there may be a case that you get a final demand letter asking some lakhs of rupees. Moreover, there happens big difference between what you had been promised and what you finally get as the finished product, the features may differ, the specifications may not match etc. Since ages, buyers have been struggling with these problems and paying the price. Developers took no cognizance and enjoyed their own sweet time to develop the project. Well, it seems the honeymoon period for the developers is over. Buyers now have a missile which they can shoot when cheated. Yes, Parliament has cleared the Real Estate Regulatory Bill and passed the provision for the creation of Real Estate Regulatory Authority (RERA).
What RERA brings on the Table for the Buyers!
RERA has many provisions to safeguard buyers’ interest and check fraudulent practices performed by developers and brokers so far. Anuj Puri, Chairman & Country Head, JLL India says, “This promises to bring in much-needed transparency and accountability to the rather opaque sector. It will create a much-needed consumer right protection umbrella for buyers of real estate, thereby increasing consumer confidence as well as creating lasting developer brands strong on quality and timely delivery of their projects”. As per the provisions under RERA, builders will no longer be able to do over-the-top advertisements. Also, developers will have to get all the necessary clearances before commencing the construction. Moreover, failing to deliver on promises may lead to hefty penalties and even imprisonment as well. Kruti Jain of Kumar Urban Development says, “Its purpose is to ensure that the buyer gets the property as per the specifications that he had been promised. It is a step forward to build retail investors’ confidence in this cash-strapped sector and ensure speedy approvals and timely completion of real estate projects”.
The bill once implemented, shall benefit buyers not only from Delhi NCR but across India. Talking about the Mumbai market which has always struggled with the scarcity of land, RERA will pave a path for fair practices. “Given the fact that land and raw material is costliest in Mumbai market this bill will ensure projects completion and possession on time to the buyers, which can help the home buyers to plan their finances accordingly so that they get their dream home without any delays”, says Kruti Jain of Kumar Urban Development. Demand in Mumbai realty market, unlike Delhi NCR, has always been there. Buyers have been showing interest in low-mid segment properties. Manju Yagnik, Vice Chairperson, Nahar Group sums it while saying, “The Mumbai Realty market is seeing an increase in the demand for property especially in the lower, mid to mid-higher segments of property. We have seen sale rise this year over the same period last year. Today, prices are favorable and compelling buyers to go forth and purchase their dream homes. With the further decrease in interest rate by RBI, there is an extra advantage to the buyer”. In the given scenario, implementation of RERA will help developers with trusted track record and safeguard buyers from the fly-by-night developers. Ms. Yagnik further says, “Given the high cost of land in a city like Mumbai and high rental costs, this bill will ensure projects adhere to project timelines and possession are given to home buyers on time. This will help home buyers who can now optimally plan their finances accordingly and are not left without a roof over their heads in case of delays. Developers with a good brand name and past record have an edge over the others. Home buyers will prefer to buy the property from a renowned and well-reputed developer who has a good track record of completing projects on time and delivering them to customers as per the given timelines”.
RERA has its own flipside as well and has started troubling the developers. Though clauses like setting up an Escrow Account ensures timely completion of a project, developers looked little skeptical about it. Manju Yagnik says, “Developers are apprehensive that the registration of under-construction projects could lead to delays. They’re also concerned that setting aside 70% of the funds collected from customers will lead to strain on the liquidity position”. Anuj Puri from JLL India also shares his concerns on this. He says, “As regards project wise 70% deposit, a better option would have been the cost of construction plus 10% in an escrow account, as the cost of construction differ state wise. This would help in the recovery of debt cost as well as hold cost and allow sufficient breathing space to developers”.
Real Estate Regulatory Authority promises fair and transparent real estate transactions ahead. It also ensures buyers get what they have been promised. However, given the confusion over certain issues, it seems the ball shall take some time to roll. The sector is in dire need of transparency and it has to be the responsibility of developers and the brokers to raise their standards and start fair practices. Unless they play their part honestly, no law can be implemented successfully. Overall in the given circumstances, no doubt RERA brings in much cheer to the home buyers, how much shall come out of the papers and hit the ground, only time shall tell!