Impact of RERA on Real Estate Industry – Residential Projects in Lucknow
On 1st May, 2017, the Real Estate Regulation and Development Act (RERA) was passed in the Indian parliament. The act, which is considered to be a game changer in Indian real estate industry, seeks to safeguard the interests of buyers and increase investments in real estate. On March 10, 2016, the Rajya Sabha cleared the RERA, followed by Lok Sabha on 15th March, 2016. Out of RERA’s 92 sections, 59 were notified on 1st May, 2016, and rest of the sections came into effect on May 1, 2017.
The RERA is expected to promote efficiency, transparency and accountability in real estate sector across the country and facilitate a healthy relationship between the customers and realty developers. Under the act, both the central and state governments have to notify their own regulations according to the model rules set up in the act. RERA aims to create fair and equitable transactions between the buyer and seller and make purchasing of house simpler. However, this will only be possible if states do not make changes in the provisions of the act.
How Would RERA Affect Customers & Housing Projects in Lucknow
The important conformities in the act are:
- Real estate developers in Lucknow have to get the consent or permission of 2/3rd buyers/allottees for any alterations or additions in the housing project.
- Developers need to inform buyers about any alteration or addition.
- Sharing information and details about layout, project plan, sub-contractors, land title status, government licenses/approvals, etc.
- No advertisement or promotion before getting the property registered with RERA.
- Permission of 2/3rd buyers for transferring major rights to third party.
- Establishing RWA within the specified timeframe or three months after most of the apartments/flats have been sold.
- Assertion on the completion of project within the stipulated time frame and timely delivery to the buyer.
The act provides a legal regimen for home buying process and aims to standardize the pattern across India. All this would lead to increased clarity and buyers will have confidence in investing their money in new or upcoming residential projects in Lucknow. Some key features of the act are:
Formation of Regulatory Authority
The act sets up Real Estate Regulatory Authority in every union territory and state and the functions include collecting data at a delegated repository and forming an effective grievance redressal system along with protecting the interest of shareholders. In order to avert time lags, the regulatory authority has to clear the applications within sixty days and the same might be extended if there is a valid reason for the delay. Furthermore, Real Estate Appellate Authority (REAT) will be the forum for appeals. The setting up of the regulatory authority in Uttar Pradesh will surely have a positive effect on customers who are looking to buy an apartment in upcoming housing property in Lucknow.
Real estate companies in Lucknow have to register their project if the total area, which will be developed, is more than 500 sq. mts. Current projects where occupancy certificate or completion certificate has not been issued, have to follow all the registration formalities under RERA. During registration, builders have to provide all the details of their residential projects in Lucknow such as approvals, licenses, land status, delivery time, etc.
Standard Sale Agreement
RERA prescribes a standard sale agreement between the developers and homebuyers. Usually, developers include clauses in the agreement, which favor them more, when compared to buyers. With standard sale agreement in place, such clauses would not be included and customers can expect a more balanced agreement while putting their money in new or upcoming residential property in Lucknow.
Real estate builders in Lucknow have to make the correct title and interest on the project’s land that can be utilized later against them by the customer, should any title or interest defect is discovered. Moreover, they have to get insurance cover against the construction and title of the project and the proceeds shall go to customer upon the successful execution of sale agreement.
RERA’s Impact on Real Estate Projects in Lucknow
- Increased cost of the project
- Increase in the cost of capital
- Tight liquidity
- Initial backlog
To begin with, extensive preparation needs to be in place to get the current or new real estate projects in Lucknow registered. Information like status of every project carried out in the last five years, in-depth implementation plans, developer details, etc., must be thoroughly prepared.
On the other hand, dedicated forums like Real Estate Appellate Tribunal and State Real Estate Regulatory Authority will be set up for easy and quick resolution of property disputes and aggrieved party will not be able to resort to civil courts and consumer forums on such matters. As RERA strives to solve property disputes in a timely manner, the real success would depend on the establishment of these resolution bodies within the prescribed timeframe and how the disputes are resolved efficiently.
About the Author: Rajeev is sales and marketing consultant at Azea Botanica, the top real estate project in Lucknow being developed by Azeagaia Development Pvt. Ltd., promoted by Singapore-based firms through foreign direct investment. This new residential property in Lucknow offers luxurious 3 & 4 BHK apartments at a prime location of Vrindavan Yojna. Rajeev has a hobby of writing articles, blogs and likes driving sports bikes and cars.
Rajeev is an avid writer and regularly writes articles and blogs on Lucknow real estate.