SHOULD ONE WAIT FOR RERA LAW TO BE IMPLEMENTED?

The real estate industry is set to get transformed after the full implementation of the Real Estate Regulatory Authority (RERA) Act. The new law will put pressure on builders to finish projects on time and fulfil all commitments. Clear definition of carpet area will take care of a major chunk of disputes between buyers and builders.

The law mandates equal penalties for buyers and sellers (12 per cent). At present, builders charge 18 per cent from customers for late payments and pay just 10-12 per cent fine for project delays. So, buyers will benefit. However, real estate is a state subject and it is not clear if all the states will implement the law for existing projects too; some might choose to do things differently. If you are not in hurry to buy, you can certainly wait for the law to be implemented to get long-term benefits. But remember that prices may rise as builders pass on the RERA burden to customers. Oberoi of Colliers India says, “Given the large supply, we don’t foresee a major increase in prices. Developers will adapt to the new regime over time. We also believe that the entry threshold for newer and smaller developers will rise once the RERA law is implemented. There will be an increased role for institutional investors now. We will also see more joint development and joint venture projects. In the long run sales should rise as transparency increases.”