RERA takes effect; Developers Rushing on Project Completion

A greater part of the country's developers appear to be on a `Mission Project Completion’ nowadays, possibly it is an impact of RERA

According to the Industry specialists developers are presently investing in speedy completion of their projects to comply with the “timely completion“ clause of the Real Estate Regulatory Authority (RERA), which will come to effect from May 1 in every state and Union territory, in congruity with the Real Estate (Regulation and Development) Act, 2016, passed by Parliament last September.

A few specialists, however, say that RERA is not the only reason. “Developers are rushing to complete their current projects, especially the ones in an advanced stage of completion, as abiding by all the regulations in RERA for a project under construction is more difficult than launching new projects under this regime. If they manage to complete their projects before RERA comes into effect in the respective states, the builders can get the occupancy certificate and need not comply with all the formalities under the provisions of RERA,“ Surabhi Arora, senior associate director (re search) of Colliers International India, said.

Surabhi says this is useful for buyers who are looking for early completion of their projects yet alerts them to guarantee that before customers take delivery of their new homes, all amenities and finishing work should have been done.

“Once RERA comes into force nationwide, consumers will be completely protected from the shenanigans of unscrupulous developers, including delayed possession, hiving off funds collected from buyers of one project to finance another, etc. As a matter of fact, unsound players will find it impossible to sustain operations in a properly-regulated market environment. What will be left are strong players with sound market practices and delivery track record. This will go a long way in clearing up the confusion in the minds of consumers and bridge the trust gap which has existed so far,” Ashwinder Raj Singh, CEO (residential services) of JLL India, says.

Saurabh Jindal, joint MD of SVP Group, also says that this is good news for homebuyers who have been waiting for a long time to take possession of their dream homes. “The penalty clause in RERA, as notified in Uttar Pradesh, will force developers to pay interest for the delayed period at the base rate for a home loan given by the bank. However, I would say that RERA can only push developers so much as, even now, only developers with good means will be able to finish their projects. The basics of real estate remains the same-financially-sound developers are the best bet for buyers and they should always check the antecedents of the developer before investing in a piece of property,“ Jindal says.

“RERA sure has a penalty clause, but if a developer has no finances, even a penalty clause cannot help buyers get back their money. One positive development, however, is that developers who were trying to work on multiple projects earlier are now trying to focus on fewer projects in order to complete them and move ahead,” Jindal said.

Whatever be the situation, work on most incomplete projects appears to be in full swing nowadays. Deepak Kapoor, president of Credai Western UP, says: “Developers in Noida and Greater Noida (West) have already handed over close to 3,500 flats since January 2017, while many other projects are nearing completion and readying for possession soon. We are targeting to deliver around 40,000 flats for possession by the end of this year.”

Same is the situation in numerous different parts of the nation. Gurgaon-based BDI Group, for example, claims to have delivered 290 units in Phase 1 of BDI Ambbaram a year ago, while they guarantee to deliver 208 more units in Phase 2 in the following six months. “RERA will be a game changer for the real estate sector. Not only will it speed up delivery of real estate projects, it will also bring in more transparency and accountability into the sector. This will result in positive consumer sentiment and boost demand”, Ssumit Berry, managing director of BDI Group, said.

“Developers are in a rush to hand over projects, as any undue delay is not be beneficial for them”, Atul Banshal, president (finance and accounts) of M3M Group, says. Three of their projects--M3M Golf Estate, M3M Merlin, and M3M Woodshire-are ready and being delivered to buyers, Banshal said. According to the Developers, the sector as a whole is passing through a phase of transformation. “RERA will bring the much-needed transparency and streamline the sector to a large extent and increase consumer's confidence in the sector”, Mohit Goel, CEO of Omaxe Ltd, said.