Indian Realty After Two Years Of RERA

By Jay Dee Infra In RERA No comments

Indian Realty After Two Years Of RERA

It has been two years since the Real Estate (Regulation & Development) Act, 2016, came into force — the various provisions of the law became effective on May 1, 2017. Work is still on to develop the infrastructure required for the effective function of the reformatory law popularly shortened as the RERA, which is aimed at purging India’s real estate sector of its many ills.

In some cases, states have not been able to set up the online portal they are supposed to for the benefit of the homebuyers.

Official records show Sikkim, Assam, Meghalaya, Nagaland, Manipur, Mizoram, West Bengal, Arunachal Pradesh, Arunachal Pradesh and Kerala have yet to launch their RERA portals.

A total of 19 states have completed that task successfully. Real estate regulatory authorities are fully functional in Punjab, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.

Problems aplenty

Aside from the fact that the basic infrastructure for the functioning of the RERA is missing in many states, there are several other challenges in its way to become a success.

“The industry has seen consolidation and enhanced lending after the arrival of the RERA. The government has encouraged the development of affordable housing by various schemes for the end-users. However, the cost of receiving permissions is still very high and the same needs to be rationalised for effective policy implementation,” says Ashish Raheja, managing director, Raheja Universal.

The law also makes it absolutely complicated for a newcomer to enter the market.

“The other downside of the law is that a young entrepreneur, who wishes to enter this business, will find it difficult. You have to be an organised player. You just cannot start and build your way up; you have to build something before you start, in terms of finance, compliance and your team. The law has made everything more challenging,” says Surendra Hiranandani, founder-director, House of Hiranandani.

A joint survey by Grant Thornton and industry body Ficci that was conducted to gauge how prepared India’s developers were to adapt to the new law reveals that 45 per cent of the participants had no formal process to comply with the rules. Only 11 per cent of participants are able to monitor compliance in their housing projects.

The study also shows that about 78 per cent of the senior management is still hooked on to using common methods such as excel-based management-information system (MIS) reporting to review the compliance while 26 per cent prefer meetings.

The Positive Note

However, there are many positives too. The industry believes it may be too early to pass a verdict against the law

“The RERA has brought an ample amount of semblance and discipline in the last two years. With the advent of the RERA, the ground realities, issues, problems and challenges facing the sector have been addressed in a dexterous manner,” agrees Praveen Jain, vice-chairman, NAREDCO.

The Grant Thornton-Ficci study also reveals 41 per cent of all participants feel that there have been major changes in the customer-vendor agreements since the law came into practice.

About 56 per cent of the participants who took part in the survey said they tried to improve their skill sets using trainings after the RERA. Another 37 per cent say they have outsourced the project management to a third party for better clarity.

In order to improve customer experience after the law came into force, 78 per cent participants have started training their staff while 11 per cent have strategically hired professional agencies to manage customer relations. Only seven per cent respondents have revamped the customer interface.

Source: PropTiger