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In order to regulate the Real Estate sector, the Real Estate (Regulation and Development) Act (RERA), 2016 came in to effect from 1 May 2016 after a long series of debates and deliberations. Grant Thornton in association with FICCI conducted a survey on RERA to gauge the sentiments of the sector about this landmark legislation.
The survey report - Real Estate Regulation Act, 2016 (RERA) - Are we ready? finds that more than 60 percent of the respondents are optimistic about greater transparency in real estate dealings with the implementation of RERA. Furthermore, more than 55 percent believe that an increase in transparency will reduce the litigations in the sector. Also, the industry is confident that RERA will be instrumental in increasing the Foreign Direct Investment (FDI) in the sector. Nearly 60 percent of the respondents within the survey feel that RERA will increase the governance hold in the sector and lead to increased investments.
During the launch of the report, Neeraj Sharma, Director, Grant Thornton Advisory Private Limited said, “under RERA, the developers might need some time to get used to its provisions and complexity of its rules. The move by the developers to comply by the provisions of RERA might push prices upwards in the short-term. But we can expect stabilisation due to the efficiencies brought in by RERA. It will not only help in expediting the completion of the ongoing projects but also immunise buyers from any fraudulent practices. Going forward, the developers are expecting more FDI to flow in to the sector, thus creating more job opportunities and revitalising the growth of the sector.”
When asked about the impact of the rule of developers depositing 70 percent of sales proceeds in a separate account, close to 40 percent of the respondents feel that the clause will help timely delivery of projects and also eliminate non-serious players from the sector.
The survey report also states that approximately 50 percent of the respondents hope that the lending options will improve and availing finance will be easier post RERA. Also, when asked which areas will have the maximum impact on the operations of their companies post the implementation of RERA, more than 40 percent of the surveyed businesses said that the maximum impact will be in the area of project planning and construction.