CHANGE = PROCESS
Sreeram Balakrishnan
Head Projects - Program and Project Management at leading healthcare group
Finally, the day has arrived when the Real Estate (Regulation and Development) Act, commonly known as RERA, will become a reality and gets implemented. From Monday, all the stakeholders in real estate sector including the most crucial lot of homebuyers will usher into a new era that will see their rights and interests being protected.
While homebuyers are buoyed and builders are busy upgrading their businesses, we all need to understand that change is a process and not just an event. Expecting transformation overnight would be unrealistic, but the changes RERA is about to bring in from day 1 will also prove to be a great start.
There’s no doubt that developers will have to adapt with the changing business environment. While most developers are embracing the change, few are still busy using excuses to burden homebuyers in order to protect their margins.
We all agree that developers’ margins have been declining owing to h igher input costs, premiums to be paid the government authorities and other “miscellaneous” expenditures. However, developers need to understand that homebuyers have already been paying for this and many such excuses for years altogether. Therefore, statements such as how housing prices would go up by 10% due to higher compliance and finance cost for the builders after RERA is in force are unlikely to be accepted by homebuyers.
Apart from homebuyers’ perceptive, it’s critical for developers as well to see that RERA brings in the much-needed transparency in the sector. With transparency, homebuyers’ will gain the confidence to enter the market and buy, which will prop up developers business. The string of ongoing reforms would attract more institutional capital into the sector.
With RERA, the sector is embarking on a journey of improved transparency and control, which will be in contrast with the way it has been for years. Buying real estat e is expected to be lot more safe as developers will find it difficult to divert money given that 70% of funds received will have to be maintained in an escrow account. Information flow will improve as the builder is expected to share the project’s approval status on RERA’s website. Several such measures will make it less risky for home-buyers.
Let’s hope that the process of enhancing transparency in the sector proves to be smooth and help yield the desired results.
Thanks to ET.