The major stakeholders upon whom the implementation of the RERA rules & regulations would have a direct impact are the potential home buyers and the developers or builders who would be handling the supply end of various real estate projects in Hyderabad. In the last few years, the relationship between the buyers and the builders has soured with the real estate sector going on a slowdown. The main reason for this strenuous relationship is the absence of any stricter regulatory for the real estate sector. However, with the implementation of the RERA (Real Estate Regulation & Development Act), 2016; there are overlooked several changes in the same.
RERA for the Home Buyers
The implementation of RERA for the home buyers is seen as a wave of fresh air as it would empower them to make better and informed decisions. While the prices might now be calculated only on the basis of the carpet area, the overall property prices in Hyderabad might not alter much for the home buyers. The Act has made it compulsory for depositing around 70 percent of the funds collected from the real estate buyers into an individual bank account in case of new real estate projects. At the same time, there will also be a collection of 70 percent unused funds with respect to the ongoing projects.
RERA for the Builders & Developers
While RERA is a good news for the potential buyers, the developers & builders, on the other hand, are quite apprehensive about several sections of this Act. The allocation of 70 percent funds from the buyers would limit the capability of the developers to invest in several new real estate projects with the help of the booking money from one residential project. This would enforce them to ensure the timely delivery of the ongoing projects to the buyers.
Until the implementation of the RERA Act, 2016; the developers were not affected in any manner in case of delayed projects. However, under the new provisions, if any delays happen in the completion and delivery, the builder would be liable for paying the penal interest of the marginal cost by the State Bank of India as per the lending rate in addition to 2 percent to the potential buyers. Moreover, the allottee’s would also be penalized if they are not able to pay the dues within stipulated time to the builders.
Under the RERA Act, 2016, all kinds of workmanship or structural defects up to a period of 5 years after the completion of the project would be under the responsibility of the developer. The home buyers can demand the after-sales services within a period of one year if there are found any deficiency in the real project. In case the promoter fails to respond properly for repairing the same, then the buyer is entitled to receive the compensation for the same.
Impacts on the Price
The real estate projects that have a minimum plot size of 500 square meters or around 8 apartments will have to get registered with the respective regulatory authorities. With the new RERA implementation, the practice of selling on the basis of “super built up area” has come to an end. The developers will now have to quote the price on the basis of the carpet area or the “super area”. The implementation of the RERA Act would do nothing to impact the price. The price would solely depend on the demand and supply parameters.
Therefore, there is no impact on the progress of the real estate sector either. Only, the proceedings would now become much more regulated and balanced.