In the past decade, the Indian real estate sector has undergone a profound transformation, shedding its previous reputation for opaqueness and uncertainty. Experts now shed light on the pivotal role played by the Real Estate (Regulation and Development) Act, 2016 (RERA) in this remarkable turnaround.
Previously, the real estate industry was often described as unorganized, unregulated, and lacking customer focus. Homebuyers faced a multitude of challenges, including projects sold without proper approvals and legal titles, diversion of funds collected from homebuyers for various purposes, lopsided transactions favoring promoters, and a lack of information on project progress and approvals. Additionally, grievance redressal options were limited, with the courts being the primary recourse for homebuyers, resulting in lengthy legal battles. Post-occupation defect liability was another issue, with homebuyers struggling to get developers to address potential issues.
This environment of uncertainty and mistrust persisted until 2019, exacerbated by factors such as oversupply in certain regions like the National Capital Region (NCR) and the disruptive impact of policy changes, including RERA, the Goods and Services Tax (GST), and the Benami Properties Act.
Anuj Puri, Chairman of Anarock Group, acknowledges that while these policy changes initially caused upheaval, they were essential for restoring trust and clarity to the housing market. He notes that the Indian residential market had suffered from a lack of regulation and erratic price fluctuations due to speculative buying and selling.
With the introduction of RERA, the real estate sector finally had a regulator in place, aimed at protecting the interests of allottees and empowering homebuyers. Key changes brought about by RERA that have transformed the sector include:
- Mandatory Approvals: Projects cannot be marketed or sold without all necessary approvals, including land titles and building permits, ensuring that homebuyers receive what was initially promised.
- Transparent Escrow Accounts: Homebuyers can be confident that 70 percent of their payments go directly into project construction through transparent escrow accounts.
- Real-time Information: Comprehensive project information, including approvals, physical progress, inventory status, and financial updates, is readily accessible to homebuyers.
- Balanced Contracts: RERA has prescribed a Model Agreement, preventing one-sided contracts in favor of developers.
- Speedy Redressal: RERA has established regulatory authorities in states to ensure quick justice for allottees.
- Structural Defect Liability: Developers are now liable for structural defects for up to five years.
These changes have not only streamlined the real estate sector but have also made it more customer-centric. Ritesh Mehta, Senior Director of Residential and Developer Initiatives at JLL, elaborates on the shifts in the industry:
- Increased Customization: Customers now have greater flexibility in choosing floor plans, finishes, and amenities.
- Enhanced Transparency: Digital platforms provide transparent information about projects, including pricing, construction updates, and customer reviews.
- Inclusive Decision-Making: Developers involve customers in decision-making processes, seeking their feedback and preferences.
- Improved Customer Service: Developers are more responsive to inquiries, promptly addressing concerns and providing post-purchase support.
- Emphasis on Customer Experience: Developers invest in amenities and design elements that enhance residents’ lifestyles and well-being.
These changes have been spurred by several factors:
- Increased Competition: A growing number of developers have entered the market, leading to increased competition and a greater focus on customer satisfaction.
- Changing Customer Expectations: Modern customers expect personalized and customized solutions that align with their specific needs and preferences.
- Impact of Social Media: Online reviews and social media have given customers a powerful voice, influencing developer reputations and credibility.
- Evolving Market Dynamics: Developers adapt their strategies and offerings to cater to changing demographics, lifestyles, and preferences.
- Emphasis on Long-Term Relationships: Developers understand that satisfied customers are more likely to become repeat customers and refer others, contributing to sustainable business growth.
In summary, RERA has played a pivotal role in transforming the Indian real estate sector from a realm of chaos and uncertainty to one marked by transparency, accountability, and customer-centricity. These changes have not only restored trust in the industry but have also paved the way for sustained growth and improved customer experiences.