Realty Bill: Home buyers still need to be vigilant

NEW DELHI: RERA bill is no magic wand and the home buyers will still need to stick to the due diligence and have to do their homework before buying any new property, say experts.

Although the recently-cleared RERA bill has brought in a lot of consumer-friendly elements to the table to help home buyers, industry experts believe that despite the bill mandating disclosing all details of projects by builders, consumers will still need to do their own aggressive research before buying any property.

“The RERA bill, however, gives consumers a lot of protection; it doesn’t protect them from an individual’s intent. For this a consumer has to be cautious,” says Rohit Gera, managing director of Pune-based Gera Developments.

In the early 2000s, when demand for real estate started to grow, a lot of developers started getting in to pre-launched sales. Consumers wanted better pricing and therefore decided to buy homes on a pre-launch basis. Often these approvals didn’t end up happening and a lot of unethical practices started taking place by individuals, which eventually led to the innocent buyers getting conned, experts in a Live Hangout session with Magicbricks.com and ETRealty.com said.

“The things will change now. The recently-cleared RERA bill will bring-in more transparency and improve the credibility of the sector. Moreover, the new act will finally pave the way for the real estate sector to be recognised as an industry,” said Rohit Raj Modi, director of Ashiana Group.

The new RERA bill strictly restricts any pre-launch sale. The new bill also assures that a consumer will get in to picture only after all the approvals are in place. Furthermore, the homebuyers are now entitled to product warranty or defect liability period, which until now wasn’t offered by any developer –small or big – across the length and width of the country. For greater transparency the delivery time will also be offered in the agreement.

"The regulator in the current situation aims to bring in more consumer-friendly elements to the table. It will further not complicate things as it is determined to put in all the information at one platform, which had never happened before. This will further help the buyers in making an informed decision, opined Vasant Rajesekaran, partner at Seth Dua & Associates

With the chaos finally expected to calm down, the industry experts anticipate that the projects and hence the unit costs may get spurred in the medium term. They observe that the RERA bill won’t have any jurisdiction over the price point and the prices would further be determined by the market forces.

“RERA will not be accountable for bringing the prices down. And in the medium term I see the prices going up as the impact of RERA,” said Modi of Ashiana.

The experts say that all the expenses that will be borne by the developers at the time of attending to the procedures and policies will eventually push the prices upward.

“Under RERA, 70% of the project money needs to be put in a separate account, which means that the developer’s larger equity is stuck in the project for a longer duration. Now, when the other costs add on, it gives an additional liability to project, thereby directly inflating the prices of the property,” Modi said.

“The only thing that will bring the prices down in the new near future will be faster approvals from the authorities and easy access to land with proper road and public transport,” he added.