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Rera
Developers adapt to a brave new world,
work still in the pipeline on many fronts

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Real Estate (Regulation and Development) Act, the landmark legislation to regulate and discipline the real estate sector in the country, completed one year of its existence on May 1 this year. Though a lot still needs to be done till a totally transformed sector takes shape, there is no doubt that it has already undergone a change beyond recognition. Transparency has become a new norm, business practices have evolved and buyers’ trust has started returning. On the Government side, however, there’s a lot still pending. Be it setting up of a permanent regulatory authority or an appellate tribunal, notifying rules or operating a web portal, most states have been slow, or acted in parts. But it’s a work in progress and the coming months are bound to see enhanced activity on RERA front by all the stakeholders involved. Herewith we present a report on the RERA-fied real sector during the past 12 months.

Team R&M

It took almost a decade into the making and when it was finally implemented on May 1, 2017, the Real Estate (Regulation and Development) Act was hailed as the beginning of a new era for the real estate sector in the country. Stakeholders across the spectrum saw RERA delivering a new, transparent and reformed real estate industry and R&M’s last May’s issue captured the sentiment most appropriately by captioning its RERA report ‘An industry REBORN’.

The coming into force of long-awaited RERA, over a year after it was passed by Parliament on March 15 last year, was, no doubt, a historic development and the all-round applause over its immense potential was no hyperbole. For the first time a serious attempt was being made to regulate a largely unorganised sector. The real estate industry, which had been operating unfettered all these years and had even earned notoriety due to the unethical practices of some of its own, was for the first time being made accountable. The new Act ignited hopes, raised expectations and signaled the advent of a new dawn for the real estate industry. And most of this was not far removed from reality.

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Hardeep singh puriHardeep Singh Puri
Urban Affairs Minister

“RERA is wonderful from my point of view…We have done whatever we could and we are willing to do more… We are now dealing with a situation where the kind of pre-RERA world will no longer be possible”.

gautam chatarjeeGautam Chatterjee
Chairman, RERA Maharashtra

“There are many areas of concern which we will have to address such as ensuring that builders who have become compliant of the laws remain compliant”.

shishir baijalShishir Baijal
CMD, Knight Frank India

“States such as Maharashtra, which implemented the regulation in true letter and spirit, witnessed signs of uptick in residential sales and overall consumers’ sentiments”.

hiranandaniNiranjan Hiranandani
President, Naredco

“The first year is typically for working out problems that need to be tweaked or altered – and this is exactly what has happened over the past one year”.

 

Manoj-GaurManoj Gaur
Vice President, Credai National

“The standards set by RERA are a blessing for the serious industry players as there is hardly any room for unethical components to sustain in the sector.”

deepak kapoorDeepak Kapoor
President, Credai Western UP

“RERA is not only improving the sentiments but lifting the confidence of homebuyers towards the sector. Realtors are also looking forward to this as a catalyst, which will definitely strengthen the real estate market in the longer run.”

 

One year into RERA regime, a lot has certainly changed, and for the better. Today, it’s altogether a new real estate industry operating under a regulatory environment, following stringent norms set by the Government and trying to be as disciplined and transparent as any matured industry should be. Though one year is rather short a time to assess the ground impact of a path-breaking legislation like RERA, the real estate industry is undoubtedly beyond recognition in the way it is conducting its business today.

SALIL KUMarSalil Kumar
Director, Assotech Realty

“RERA is the biggest achievement of democracy in India…I congratulate the Government for implementation of RERA and boosting the confidence of investors and actual users”.

Dhiraj Jain
Director, Mahagun Group

“Homebuyers are now placed very well to take the decision of owning their dream home without any second thoughts”.

Gaurav GuptaGaurav Gupta
Director, SG Estates

“RERA has helped speed up project execution and delivery, boosting demand and sales, in turn contributing to the revival of residential real estate”.

A large part of the developer community, despite its initial inhibitions, has been swift in fulfilling a plethora of requirements ordained by the new Act and seems to have adapted well to the RERA regime. As a result, homebuyers have started perceiving it in a new light and started returning, with a fresh dose of confidence. Investors have begun treating the sector with more seriousness and are readying to include it in their portfolio. The biggest transformation, of course, has been the gradual easing out of the non-serious, and unscrupulous, players from the realty arena. A total purge of the industry will take much longer but the consolidation has begun and it is gathering steam by the day.

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  • The coming into force of long-awaited RERA, over a year after it was passed by Parliament on March 15 last year, was, no doubt, a historic development and the all-round applause over its immense potential was no hyperbole.
  • Today, it’s altogether a new real estate industry operating under a regulatory environment, following stringent norms set by the Government and trying to be as disciplined and transparent as any matured industry should be.
  • A large part of the developer community, despite its initial inhibitions, has been swift in fulfilling a plethora of requirements ordained by new Act and seems to have adapted well to the RERA regime.
  • Majority of the state governments are still to do what they were supposed to do and the Centre has not been able to push them strong enough to do it.
  • A total of 27,000 real estate projects have been registered with the regulatory authorities across the country till date and approximately 17,000 applications for registration of agents have been received so far.
  • The fact that Maharashtra RERA has been the most active is borne by the fact that of the total projects registered under RERA across the country, 62 per cent are in this state, said a report by real estate consultancy firm Knight Frank.
abhishekbansal-pacificmall2Abhishek Bansal
Executive Director, Pacific Group

“It has succeeded in establishing a spectacular linkage between the buyers and developers so that all the work is being completed within proposed timeframe”.

 

Arjunpreet Singh Sahni Executive Director, Solitaire Group Arjunpreet Singh Sahni
Executive Director, Solitaire Group

“By empowering homebuyers with exclusive rights, RERA has successfully brought a sea change in their perception towards real estate sector in the last one year of its implementation”.

 

pankaj jain Pankaj Kumar Jain
MD, KW Group

“The impact of RERA has been such that it has almost weeded out all the unscrupulous players while simultaneously creating a level-playing field for recognised developers.”

 

Ashok Naidu
Director, Kumari Builders and Developers

“The Karnataka Government is a step behind in implementing RERA. Only a third of files applied for RERA have been cleared till date. Lack of knowledgeable employees and transparency are some issues faced by K-RERA itself”.

Though RERA has been able to achieve a lot of what it set out to do, it’s still a long way to go. Things have started changing for the better, errant players are falling in line, projects are getting registered and a new wave of trust has entered the realty market. The process is continuing and a lot still needs to be done, most of it from the authorities concerned. Majority of the state governments are still to do what they were supposed to do and the Centre has not been able to push them strong enough to do it. In fact, some experts are even accusing the Urban Development Ministry of not being as proactive in the case of RERA as the Finance Ministry has been in the case of pushing GST.  Data available in public domain gives credence to most of such accusations.

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Out of the 28 states (the Act is not applicable in J&K) in which RERA is enforced, only eight states and Union Territories have established a permanent real estate regulatory authority as mandated. This includes Andhra Pradesh, Gujarat, Madhya Pradesh, Maharashtra, Odisha, Punjab, Dadra and Nagar Haveli and Daman and Diu. Nineteen states and UTs have established an interim regulatory authority. Only three states and Union Territories, including Gujarat, Tamil Nadu and Andaman & Nicobar have established a regular appellate tribunal. A total of 13 states and UTs have appointed interim tribunals.

Ankur Dhawan, VP, PropTiger Data Labs Ankur Dhawan
Chief Investment Officer, PropTiger.com

“In states where RERA is properly implemented, we are experiencing significant return of buyer confidence…There is sufficient incentive for all states to implement it quickly with proper website and permanent staff as it will add to their revenues”.

 

ajay jaiswal Ajay Jaiswal
V-P, IIFL Home Finance

“RERA implementation is yet to be seen in its true sense. It will start impacting developers this year because of the compliances involved and also how the authorities react to non-compliant developers”.

Sixteen states and Union Territories have so far made a fully operational web portal for enabling online registration of real estate projects and agents. Though as many as 27 states and UTs have notified rules under RERA, some have diluted these drastically and West Bengal has come up with its own version of RERA. Maharashtra, Madhya Pradesh, Punjab and Gujarat are the four states which have been forerunners when it comes to effective implementation of the Act.

Despite all this, a total of 27,000 real estate projects have been registered with the regulatory authorities across the country till date and approximately 17,000 applications for registration of agents have been received so far. It’s undoubtedly a far-reaching development that signifies the ushering of a new dawn in the realty horizon. Housing and Urban Affairs Minister Hardeep Singh Puri, was, perhaps, referring to this very dawn when he told MoneyControl.com in a recent interview that the real estate sector is better off with RERA. “RERA is wonderful from my point of view”, he told the news portal, adding, “We have done whatever we could and we are willing to do more… we are now dealing with a situation where the kind of pre RERA world will no longer be possible. Now people will have the protection which the Act provides and the developer or the promoter is liable as he has assumed certain obligations.”

No less relevant in this context is the statement of Gautam Chatterjee, Chairman of RERA in Maharashtra, which was the first state in the country to implement the Act from May 1, 2017. Speaking to news agency PTI on completion of one year of RERA implementation, he said the biggest challenge now is to keep the builders compliant of the law. “There are many areas of concern which we will have to address such as ensuring that builders who have become compliant of the laws remain compliant,” said Chatterjee. He said challenges the Act poses are quite serious, which all the stakeholders will have to deal with.

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On the number of complaints received by the authority during the year, Chatterjee said, “We received around 2,387 complaints of which over 2,000 appellants have completed the appeal process and around 1,200 cases were resolved”. It is worth recalling that Maharashtra RERA, along with developers’ bodies such as the Naredco, Credai and MCHI and representatives of the Mumbai Grahak Panchayat, has formed MahaRera Conciliation and Disputes Resolution Forum as an alternate dispute resolution mechanism under the Act.

“The purpose of setting up this forum was to create a level-playing field where both the parties should be able to discuss and negotiate on terms equally, before coming to us. So, the basic objective was to rebuild trust between the buyer and the developer,” he stressed.

Speaking about the transformation which the Act has brought about in the sector, Chatterjee said, “RERA has not just addressed the issues of compliance and transparency, but it has also brought back consumer confidence. As projects are now registered, buyers can now make an informed choice. For any grievance, they have a quasi-judicial redressal platform”.

The fact that Maharashtra RERA has been the most active is also borne by the fact that of the total projects registered under RERA across the country, 62 per cent are in this state, said a report by real estate consultancy firm Knight Frank. It, in fact, went on to say that the poor implementation of RERA in various states has had an adverse effect on revival of the realty sector. “States such as Maharashtra, which implemented the regulation in true letter and spirit, witnessed signs of uptick in residential sales and overall consumers’ sentiments,” Shishir Baijal, Chairman and Managing Director of Knight Frank India, said.

Pointing towards the lackadaisical, rather shoddy, implementation of RERA in rest of the country, the report said leaving out Maharashtra, Madhya Pradesh and Punjab which have appointed permanent regulators, all other states are functioning with interim designated regulators. Highlighting the fact that Haryana, Assam, Kerala, Telangana and Odisha do not have web portals, the Knight Frank report said that even in states where web-based portals have been launched, the information uploaded by developers is so scanty that it is practically of no use. West Bengal, it said, has not even notified the Act and the seven northeastern states, too, have not notified it because of certain Constitutional obligations.

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The slow pace of work by states on RERA front has, however, failed to deter the developer community. Having sufficiently adapted to the new environment and continuing with their bit for a year, they seem patient enough to wait for states doing their job. Summing up the industry sentiment, Naredco President Niranjan Hiranandani, said, “The first year is typically for working out problems that need to be tweaked or altered – and this is exactly what has happened over the past one year”. Going further, he said, “We need to see how things work out in coming months before we can take a call on how to explain it, but at present, I would say the performance of the RERA has been encouraging”.

Voicing somewhat similar sentiments, Manoj Gaur, Vice President of Credai National and MD, Gaurs Group, said, “All the serious players of the sector have always observed RERA as a booster. It has eased the work of choosing a right developer as all the relevant information of any project can be gathered from a single platform. Homebuyers are now receiving what they had been offered before selecting their home.” According to Gaur, the standards set by RERA are a blessing for the serious industry players as “there is hardly any room for unethical components to sustain in the sector.”

Deepak Kapoor, President, Credai Western UP and Director, Gulshan Homz, said RERA has been one of the biggest reforms in the real estate sector which has changed its framework across the nation. Since its implementation, RERA, he said, “Is not only improving the sentiments but lifting the confidence of homebuyers towards the sector. Realtors are also looking forward to this as a catalyst, which will definitely strengthen the real estate market in the longer run.”

Salil Kumar, Director, Assotech Realty, dubbed RERA as the “biggest achievement of democracy in India.” According to Kumar, with the implementation of RERA, the customer is feeling much secure and has enhanced confidence in the developer. The developers, he said, are also working hard to achieve good quality products in India. “I congratulate the Government for implementation of RERA and boosting the confidence of investors and actual users”, he said.

After the beginning of RERA era, the much needed transparency has come in the real estate sector, according to Dhiraj Jain, Director, Mahagun Group. Each project, he said, needs to have a separate escrow account under RERA so that investors’ money can be spent on that particular project only. “Consequently, homebuyers are placed very well to take the decision of owning their dream home without any second thoughts”, concluded Jain.

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Gaurav Gupta, Director, SG Estates, is of the view that RERA has empowered and facilitated the homebuyers with a single platform where they are able to get all the required information for any project. This progressive regulation, he said, has helped “speed up project execution and delivery, boosting demand and sales, in turn contributing to the revival of residential real estate”. Now developers are focusing on deliveries and readying pipeline of completed homes for sale, he added.

Abhishek Bansal, Executive Director, Pacific Group, opined that RERA has an important role in pacing the growth of real estate sector. According to him, the interests of both builders and buyers are fairly protected under RERA and “it has succeeded in establishing a spectacular linkage between the buyers and developers so that all the work is being completed within proposed timeframe.” Adding a rider, however, Bansal said, “Although realtors are fulfilling the criteria as constructions are being carried as per RERA norms, there are few places which require further amendments.”

Lauding the impact of this landmark Act, Arjunpreet Singh Sahni, Executive Director, Solitaire Group, said, “By empowering homebuyers with exclusive rights, RERA has successfully brought a sea change in their perception towards real estate sector in the last one year of its implementation.”  RERA, according to Sahni, has also acted as a “catalyst in the institutionalisation of the real estate sector while simultaneously performing the bigger role in helping the industry regain the lost trust of the majority of buyers.”

Pankaj Kumar Jain, MD of KW Group, too, feels that RERA has systemised the real estate business operations to a large extent. Besides bringing in many other positive changes, he said, the impact of RERA has been such that “it has almost weeded out all the unscrupulous players while simultaneously creating a level-playing field for recognised developers”. He said although the response to RERA has not been much satisfactory in some regions, “Ghaziabad and Noida have witnessed much-improved sentiments in the last one year.”

Striking a divergent note, Ashok Naidu, Director, Kumari Builders and Developers, said, “For the first six months following the implementation of RERA, the primary market was in a pause mode with very few launches as developers were trying to complete registration formalities. For the same reason, buyers were also in a wait-and-watch mode.” There has been a decline in new launches post-RERA, he said, adding that the luxury market has been affected the most. Also, he said, the Karnataka Government is a step behind in implementing RERA. “Only a third of files applied for RERA have been cleared till date. Lack of knowledgeable employees and transparency are some issues faced by K-RERA itself”, lamented Naidu.

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Focusing more on state governments’ approach to RERA, Ankur Dhawan, Chief Investment Officer, PropTiger.com, said, “At the end of the first year, RERA implementation has been patchy and varied across states.” Whereas states such as Maharashtra and Rajasthan are leaders in RERA implementation, he said, Telangana and West Bengal are laggards. He went on to say that in states where RERA is properly implemented, “we are experiencing significant return of buyer confidence.” Adding a word of advice, Dhawan said, “There is sufficient incentive for all states to implement it quickly with proper website and permanent staff as it will add to their revenues.”

Making a rather balanced assessment, Ajay Jaiswal, Vice-President and Head of Compliance at IIFL Home Finance, said, “RERA implementation is yet to be seen in its true sense. It will start impacting developers this year because of the compliances involved and also how the authorities react to non-compliant developers.” The efficient developers who are able to manage the pace of construction and eventually deliver a quality home will help the real estate sector become a trusted industry, he said. “Once this sector becomes a trusted industry, lot of investment can be attracted domestically and internationally”, concluded Jaiswal.

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