RERA Making You a Cautious & Conscious Homebuyer
RERA keeps trying to constantly raise awareness about new rules and amendments for protecting the home buyers. The regulatory body is still new but has come a long way in such a short time. However, it's important for buyers to understand how to deal with situations more proactively.
By Apeksha Pandita in Property Law
Dec. 28, 2018, 11:28 p.m.
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A paradigm shift has taken place in India’s Real Estate industry since the implementation of RERA. However, the impact of RERA has been tremendous but it still remains a work in progress, as the industry goes through a transformative phase.
Well, in a recent survey conducted by Magicbricks, 74% of homebuyers didn't know a lot of things like:
it is mandatory to check the registration of the project with the state RERA
how to go about checking it on the RERA website
While implementation calls for a lot more than awareness and sensitization, RERA has developed transparency in the industry. However, the homebuyer is now more aware and alert, whereas the developers are being more cautious.
Homebuyers must know how & when to protect their interests and exercise their rights. Since RERA Act has given a confidence boost, but homebuyers still continue to face some challenges.
Buyers Must Make a Move Ahead
To educate you on the Indian residential market, typically it has a two to three-year bear cycle, following a bull cycle of about four to five years.
You might ask what is bull and bear cycle?
Well, a bull market is a financial market of a group of securities in which prices are rising or are expected to rise.
The term "bull market" is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, currencies and commodities.
Whereas, the opposite of a bull market is a bear market, which is characterized by falling prices and typically shrouded in pessimism.
A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and thereby selling increases.
The use of "bull" and "bear" to describe markets comes from the way the animals attack their opponents. A bull thrusts its horns up into the air, while a bear swipes its paws downward.
Buyers Should Know About the Market
Given the circumstances, if the outlook for the market remains weak and there are alternative sources of better investments, one could exit by treating this investment as a sunk cost.
Whereas, if the outlook is positive or at least better than alternative sources of investment, then one can stay invested.
A property investor must gauge these factors at a micro-market level and make an assessment on the current health and the outlook of the market.
Factors that affect pricing are as follows:
income-housing price ratios
underlying economic growth
consider the need for liquidity
alternative sources of investment available
Let's Understand this in a Situation
There are various housing projects, especially in Delhi-NCR, which are stuck due to various reasons. In case of delay in delivery of possession, there are multiple legal options available to the buyer.
So, in case, you bought a house. This was supposed to be delivered three years ago, but there has been a delay. So, should one claim the investment back with interest or should one wait for delivery?
Well, if the property was bought for self-use, then one may want to wait for delivery. But, since every project has a clear timeline now under RERA, you can always consult a good lawyer in such cases.
Many recent developments at various courts and government bodies indicate that if homebuyers come forward as a group, the matters can be resolved faster. This will come as a huge advantage to the buyers in many ways.
In such cases, the regulator will ensure that an escrow account is created and money is deposited in the account. This will be jointly monitored by representatives of homebuyers and the developer. It will also ensure that the money is spent only on the construction of the building.
Another Case Scenario
What if your developer is refusing to register the project under RERA?
In such cases, the buyer can write to RERA with substantial proof of the property. Also, inform that the builder is not registering the project under RERA.
Then, the state RERA would ask the builder to get the project registered and if the developer doesn’t comply, RERA will file an FIR against the developer concerned. The penalty may extend up to 10% of the estimated cost of the real estate project and imprisonment of up to three years.
But, what if the developer goes insolvent and your project is stuck?
Insolvency is inherently complicated and in such cases, Insolvency and Bankruptcy Code (IBC) will provide for two options — either liquidation or resolution. In stuck projects, it's best to create a group of homebuyers than fight alone as individuals.
Therefore, it's time for buyers to realise that it is prudent to pursue their matters as a group than as an individual. Especially, in stuck projects. Where many homebuyers have come forward and created a group. This not only creates a pressure on the developer but also leads to progress.
RERA has truly acted as a great boon
However, there is good news for consumers, that the government has modified the status of homebuyers to that of a creditor. By doing so, it's bringing consumers on a par with financial institutions.
This is a huge relief to millions of homebuyers, whose projects are stuck. This new amendment gives homebuyers the power to claim their dues alongside banks and other creditors.
These changes have put the responsibility on the developers to ensure that projects are completed on time.
Every real estate law in the country is now being designed to safeguard the interest of homebuyers. The hand of the homebuyers is being strengthened and they can now do much more to protect their interests.
"Thanks to RERA!"