Is it a good time to buy now or post RERA implementation?
The real estate sector which is plagued with fraudulent practices and unaccounted black money transactions is anticipated to see a major turnaround in market sentiments post the implementation of the ambitious Regulation and Development Act (RERA) 2016. However, is it a wise decision to buy now or waft for RERA to take the final call? Real Estate Experts delves into the upside in both scenarios.
Aimed to protect the interest of homebuyers, it is speculated that the Real Estate (Regulation and development) Act 2016 will usher transparency, accountability and efficiency in the real estate sector. It will also act as a reform that will provide a major thrust on ease of doing business.
Advantages of buying a property after RERA
Reduction in unauthorized projects : Every project will be registered with the appointed state tribunals (with some exceptions) which means that non-registered projects cannot be offered for sale or booked by promoters.
Transparency : The developer is required to update each and every information related to the project on the RERA website, including approvals, layout planning and completion schedule to ensure transparency.
Delay in projects would reduce : The builder needs to maintain an escrow account where they will have to park 70% of the advance fund collected from the buyers and the same can be used only for the stipulated project construction.
Penalty for developers to reduce malpractices/fraud : Delay in projects would mean that the developers will be liable to pay the respective interest component of the EMI to each consumer in case of delays.
Address customer grievance : Formation of Real Estate Appellate Tribunals to resolve issues related to property disputes with an aim to deliver quick and clear resolution without any delay.
Regulatory intervention : Establishment of an advisory body to advise the central government on major questions of policy and protection of consumer interests. The advisory body will have members from select ministries, RERAs and representatives from the real estate industry.
Consolidate the brokerage industry : Indian real estate sector is largely unorganized and fragmented. Considering this, real estate brokers will have to change the way they conduct business as they will fall under RERAs ambit. This means that developers and real estate agents involved in unfair and fraudulent business practices will observed and tackled immediately.
Is it wise to buy now?
Interest rate cut : Despite repeated repo rate cuts by Reserve Bank of India (RBI), the banks have been slow in transferring the benefit to the consumers through a parallel reduction in home loan interest rate. However, there has been a 30-50 basis points reduction in interest rate. Industry stalwarts expect a further decrease in rates, which will be a stimulator for market demand.
Demonetisation : Post demonetisation, the real estate market has slowed down significantly. "Interest rate cuts, marginal discounts and certain kind of incentives offered by the builder have come as an opportunity for genuine buyers to park their white money in real estate," adds Nath.
With reputed builders : Most of the reputed developers do not accept cash and prefer transparent transactions. The enhanced transparency and accountability of developers to carry out fair practices and timely project completions will only benefit home buyers. "Once RERA is implemented, improved buyer sentiments may push property prices up," adds Prashant Nath.
Although many stakeholders believe that homebuyers should wait for RERA to be implemented, the popular belief remains that one should make use of the current slowdown in prices to clinch a good deal within their required budget and specific location.
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