Real estate regulatory Act (RERA) is expected to be a game changer for the industry and widely change its working dynamics, according to MP Ahammed, chairman, Malabar Group of Companies. In an interview with Sobia Khan, Ahammed talks about the hurdles and challenges post implementation of RERA: Excerpts Edited:
What hurdles do you foresee post implementation of RERA?
RERA would give more clarity in real estate transactions and avoid ambiguity for customers. The accountability quotient of developers would be enhanced as the Act makes it mandatory for them to furnish key project information like government approvals, status of the land title, layout plan and contractors associated with a particular project. With an enhanced impetus on transparency, consumer protection would assume paramount importance and remove the opacity that normally surrounds property deals. Stringent provisions will spur the completion and delivery of projects within tight deadlines and ensure that buyers are not at the receiving end of builders.
What other challenges do you foresee by the implementation of the RERA?
Government agencies will have to gear up to adhere to the provisions of the RERA Act. Construction activity could face unwarranted delays in the event of government interventions and other external challenges. The stringent provisions of the Act may force a builder to deliver projects on time but if difficulties arise in obtaining a government NOC, it could lead to negative financial implications and delayed delivery deadlines.
Will the RERA bring order in transactions and more transparency in the market?
A key RERA provision stipulates that 70% of funds collected from buyers in a projects need to be deposited in an escrow account. It will ensure that the builder completes the project on schedule. This will also lead to funds not being diverted for other ongoing projects by the developer. This provision will bring in much-needed transparency in the real estate sector and help protect the interests of the buyer by ensuring that properties are delivered in time and the transaction book of the developer remains in order. Fly by night operators who have eroded customer confidence and reduced the credibility of the sector will find it extremely difficult to operate, leading to enhanced transparency in the realty domain.
What about consumer activism? Will the number of litigations against developers come down, in the longer run?
Some builders delay the handover of properties to consumers and this forces them to knock the courts of law for dispute resolution. RERA will act as a key consumer empowerment mechanism as consumer forums will have a standard law for reference while deciding the terms and conditions while deciding on compensation awards to home buyers and imposition of penalties on developers. Till the time RERA is implemented in its entirety, it is broadly expected that litigations would be on the higher side. However, the Act is expected to be a game changer for the industry and widely change its working dynamics.
How can a consumer actually benefit from the RERA and how will it benefit CREDAI’s overall vision?
An emphasis on transparency, insistence for timely delivery of projects and focus on the quality of projects are the key components of RERA which will provide security to home buyers and increased choice for projects within their budget as the projects will need to be widely displayedand advertised by the developers. This Act has been formulated to provide an enhanced edge to the consumer who till date has been hassled by issues like delayed deliveries, ballooned budgets and extended EMIs. With the enactment of this Act, the realty sector has been provided with a much-needed regulatory watchdog who will ensure that customer interests are not compromised and developers adhere to project specifications and deadline, largely realizing the overall vision of CREDAI and the Indian Government’s benevolent goal of “Housing for All” by 2022.
What are your views on the price trend? For how long will the market continue to witness a slump in the sales?
Customers with a clear understanding of the market and a better alignment of their budgets with real estate prices are real buyers and are there in the market to buy. However, there is a certain segment of consumers who have adopted a wait and watch approach and delayed their decision to purchase a property till the Act is implemented and its impact ascertained. This is however restricted to real estate projects in metros.
source from: http://realty.economictimes.indiatimes.com/news/industry/rera-will-act-as-a-key-consumer-empowerment-mechanism-mp-ahammed-chairman-malabar-group/58262073
