In 2016, when the parliament cleared a much-anticipated real estate regulation bill which vouched to lock transparency in an unregulated realty industry, it was good news for everyone. RERA a.k.a. ‘Real Estate Regulatory Act’ – solved many existing concerns, eased the consumers’ lives and empowered righteous developers in the country. Indeed, RERA is considered to be one of strongest government reforms to have revamped an industry like real estate. The best highlight aboutRERA is that it provides a singular legal regime for buying flats and apartments to standardise the exercise across the country. But, amidst myriad benefits – is RERA that perfect? Let’s look at some areas under RERA that still have room for improvement.
Heap of Approvals
In order to make the property RERA-compliant, builders have to secure multiple approvals for existing and upcoming projects. Mostly, a lot of apartments or properties are built in phases and the act mandates that each phase requires separate approvals from the government. For instance, if a builder does not get one clearance, his number of approvals goes even higher –affecting the delivery and the proposed timeline of the project. Also, there is a drawback, that as per the Act – the government authorities are not encapsulated in the approval process which points out to higher possibilities of extreme delay and increased dilemma for the builder.
Fewer options in the market
Imagine a builder chasing approvals all the time, for his existing business. As tedious as it sounds, this eats up a lot of time that could be ideally invested for new launches. Over a period of time, this will lead to a decline in the number of choices that buyers have in the market, and reduction in opportunities for builders – which could potentially result in an industry slowdown.
Demand and Supply Gap
While one of the prominent features of RERA is that it restores transparency by eliminating fraudulent builders from the picture, this largely creates a demand and supply gap. There is high demand from buyers for property but just a small community of developers, verified, and authorised to sell properties(under RERA). This creates a clear dent in the industry and a chunk of new approval process deters new entrants from joining the builders’ league. According to a latest report published in Mint, In the top Indian 10 cities, there are around 45,000 developers but after RERA, the market is just left with lesser than 20,000 developers.
Exploitation of Loopholes
A few regulations in act provide loopholes for builders looking for a way out. For example, there is a regulation for assignments above 5000 sq. metre but there is no rule for properties below that level. Various developers can still get away from the legal lens to go ahead and land a few buyers in trouble with extravagant prices and delayed delivery.
Under RERA there is absolutely no cover on rental and the act does not mandate any rental agreements or arrangements.
RERA is certainly a boon in the larger picture of realty than a bane. However, it’s critical to be aware of these shortcomings and address them in due time.