Now the real question is what effect this Act will have on pricing particularly in the residential sector in various areas like residential flats in Gurgaon. Well, that cannot be answered with a Yes or No plan. What happens is that this law will affect different inventories differently. As for new releases, prices are expected to rise while existing property will be on a price pause until supply runs out. For example, the flats already built in Gurgaon may or may not have any additions to their value.
Commenting on the same, Puravankarasays CEO Ashish R Puravankara said that new property launches for example flats in Gurgaon or any other residential area will increase initially but will eventually decrease resulting in a extremely different scenario compared to current supply and demand. equation, affecting the price of immediate property throughout the industry.
Land under construction in the real estate sector represents the majority offer. These include unsold properties as well. Construction will end only after a year. These unfinished sites must now register under RERA and comply with its rules and regulations.
One of the many rules of RERA includes the sale of property on a ‘super area’ basis and not on ‘built-up super area’ (as was previously the case). RERA initiates the sale of land on a carpeted area basis (excludes wall or duct areas, etc.) and is 30-15% less in quantity compared to ‘super built-up area’. This will result in a 40% to 50% increase in cost per square foot of land. But this increase is unlikely to affect the general price of land, which will result in affordable housing in Gurgaon, Delhi or Mumbai, you name it.
The new RERA rules have helped bring transparency, careful rule management and timely delivery of projects. RERA has been introduced specifically from the point of view of minimizing risk to buyers. The buyers will have to pay the corresponding premium which will help in the transfer of the risk from the buyers to the developers and they will now have to bear the default cost (if any).
Builders are already facing problems raising funds for construction sites, now registering that property under RERA will be a whole new burden for them, but everything is initiated by the government to make sure the buyer faces absolutely no problem. with the purchased property.
The RERA Guidelines also make it relatively easy to increase prices as demand will increase relative to supply. The following guidelines must be followed to make RERA impactful and satisfying:
First, developers now have to register incomplete and new projects with regulatory authorities within three months from the date of RERA implementation. Second, they must deposit 70 percent of the funds collected from the buyers in a separate bank account for the construction of the project. This will guarantee the withdrawal of the amount only for construction purposes and the completion of the projects on time. In case of delay, now the responsibility for the price increase and the monthly interest to be paid to the banks will fall on the developers and not on the consumers as was the previous scenario. The law also establishes penalties for developers who delay projects. Developers are also required to disclose their project details on the regulator’s website and provide quarterly updates on construction progress. Third, the law establishes that any defect in structure or workmanship within five years after the date of possession will be taken care of by the developer at no additional charge. In the event that the promoter fails to do so, the injured consumer is entitled to compensation from the promoter.
To make the act heinous, a prison sentence of up to three years is imposed for the developer and up to one year for agents and buyers in case of violations of the orders.
According to the data, nearly ten lakh buyers every year invest their money in the real estate industry with the dream of owning a house and the implementation of this act is a paradigm shift to stabilize and drive substantial growth of the real estate industry. estate.
