Effects of RERA in real estate will boost prices, but make services better
The Real Estate Regulation and Development Act (RERA) was devised in 2016 and implemented on May, 2017. The effects of RERA in real estate are encapsulated as a pill against malpractices done by builders and real estate developers. The Act will streamline all the realty operations and ensure timely deliveries of properties to the customers. A 10.9% interest levied on the late deliveries will ensure that. RERA will also alert buyers through reliable info on builders, provided on their portal. If there is a sudden change in building plans, builders will be fined. The RERA Act will significantly slow down the competition in the market as small dysfunctional companies won’t be able to survive the change in management. However, this will cause a deviation in the prices of properties.
The Goods and Services Tax (GST) is bringing down the rate of flats and commercial properties as raw materials are getting cheaper. RERA, on the other hand, might jump the prices as compliances and regulations become stricter. But to counter that, the calculation based on carpet area instead of the built-up area will drive down the per-square-feet cost by 30%.
As the pressure to deliver increases, the developers will have to raise construction prices. Additionally, the risk of the project has been transferred to the developer. The Managing Director of Gera Developments, Rohit Gera explains, “Before the introduction of RERA, the risk on account of delays, quality, title, and changes in the project were all borne by the customer. As a result, most customers had to deal with some sort of the default and were forced to bear the cost of this default.” He adds, “These costs will now be borne by the developer, and there will be a consequential premium that the flat purchasers will have to pay for transferring this risk to the developer.”
There won’t be a huge wave of raised prices but the buyers are advised to saddle up for a slightly expensive affair. The services offered in lieu for the premium justifies the bill buyers might have. It’s better to pay for a high-priced flat offered by a reliable developer than to consider an attractive deal offered by an untrustworthy small-time developer.