The implementation of Real Estate (Regulation and Developmen) Act, 2016 [RERA] on 1st May, 2017, has been instrumental in propelling the real estate markets in terms of buyer confidence and sales. States which have managed to efficiently execute the Act are reaping the benefits of enhanced transparency. While there are a multitude of ways in which the Act is yet to impact the market, 99acres asks P Ravindra Pai, Managing Director, Century Real Estate on about how has it proved its mettle in the last one year.
One year on, what fundamental changes has RERA brought to your city’s realty?
RERA is India’s first real estate regulatory act passed by the Central Government to bring about accountability and transparency in the real estate industry. Through RERA, the developers have to disclose property details, approval status, development plans and timelines for all ongoing projects and also register new project launches through an online portal.
Karnataka has been one of the first few states in the country to launch an online portal for registration of projects, online land records maintenance, compilation of land data and filing complaints. Karnataka RERA (KRERA) has registered more than a thousand ongoing projects, second only to Maharashtra RERA (MahaRERA). Potential buyers can research on RERA website for details of rejected projects and projects under litigation, thereby sufficiently warning them. The portal also provides details on petitions filed by buyers, petitions that are settled, annulled or withdrawn. The disadvantage of the portal was that some of the procedures based on compromise petitions were not recorded, thereby not recording the deals between the parties.
Have developers overcome the initial hiccups pertaining to the Act?
When a new policy or regulation is introduced, there will always be initial hiccups in any industry. RERA was introduced at a time when people were still getting used to the changes brought about by demonetisation. At the time of its launch, there were many States who were still trying to set up regulatory authorities and online websites. This affected the developers as many States were not even ready to register projects manually.
Registering new projects was made easier than ongoing projects as there were no proper guidelines issued for the same. The developers had deadlines to meet the registration of their projects and with no proper guidelines there were a few hiccups which disrupted business activities. The developers could have their projects registered as soon as the requisite infrastructure was in place. RERA will benefit the homebuyers as they will be aware of the progress of their projects and it will also help developers to benefit from the transparency to generate improved institutional fund flow. The developers expect faster permissions and processes to make this a viable proposition. The challenge to the developers will be to manage liquidity in the short term.
What are the challenges that still exist in the face of RERA compliance?
Like any other industry, real estate also faced challenges during the implementation of the regulations. Under RERA, developers are dependent on the authority for their projects to be registered and for approvals, post which they can advertise and enter into sale agreements. The authority should also recommend the State government to provide a single window for time bound project approvals.
Appointment of a permanent authority under RERA and proposing an online single window clearance system will help in hassle-free progress of projects. This will also help in reducing red-tapism which delays the growth of real estate sector.
Are you expecting new project launches this year?
Yes, we will be launching our iconic commercial project in North Bangalore. We are also planning to develop around 7-8 million sq ft of office projects in the city with an investment of Rs 1,000 crore to expand our commercial portfolio. We also have multiple launches in terms of plotted layouts and apartment projects in the present year. An investment to the tune of Rs 1,100 crore to develop 7,000 homes in the affordable segment in the next five years is in the pipeline.
What is the buyers’ response towards RERA or RERA-compliant projects?
For homebuyers, RERA has been a blessing. The transparency and the regulations under RERA have aided the buyers in receiving the details about the plot, building plan and even the completion date of the project. There have been cases in some States where RERA even allows homebuyers to withdraw from projects, are refunded after legible deductions and some are refunded with interest and compensation for mental stress depending on the severity of complaints received. Prior to RERA, in projects where there were risks on account of delays, quality, title and changes in the project, the expenses had to be borne by the customer. Post RERA, the developer will have to bear the costs and there will be a significant premium that the homebuyers will have to pay for moving this risk to the developer. Timely delivery of the projects, notification about minor addition or alterations, sharing and updating on project plan, government approvals and land title status are some of the compliances which have made the buyers happy.
Are there any amendments that you are seeking from your State authority?
In Karnataka, it will help the developers if there are transparent land records management through a single window to handle land records which will include maintenance and updation of maps, survey and registration of property. It will also benefit if online approvals of plans and occupancy certificates are done at a much faster pace. It will help in showcasing the ownership status and ease overall business processes in the sector. Overall, it must become easy for the developers and buyers to check on the authenticity of the land or the property.
Overall do you think the market has come to terms with RERA?
In the span of one year that RERA was introduced, the industry has been evolving. There is increased transparency and regulations are being followed. These have only helped in the processes getting streamlined. The developers across the real estate industry are strategising their business portfolio to align with the emerging reality of RERA.