What is the Impact of RERA on Real Estate Prices in Mumbai?

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What is the Impact of RERA on Real Estate Prices in Mumbai?

Impact of RERA on Real Estate Prices in Mumbai

It’s a four-letter word which has been regulated for real estate sector’s growth, and it’s called

RERA (Real Estate Regulatory Act).

What impact does it bring? Read on to find out.

For too long there have been demands for better transparency and accountability in the area of real estate transactions. Laws were too indefinite, recourse methodologies were obscure, home buyers were in a lurch and the legal process was burdened. To address these critical issues, RERA was passed by the cabinet in May 2016. However, real estate being a state subject, the implementation has to be done separately by each state and the state government also has the powers to make necessary modifications to the law if required.

‘Change is the only constant’ said an intelligent person and this adage holds true even today. Presently every stakeholder of the real estate sector will agree with it in Toto. So what holds in the future? Only time will tell, but what we can now foresee is this:

  • The sector is heading towards transparency
  • It is getting competitive & consumer-focused
  • Process is now becoming hassle-free

These reformations have painted a bright picture in front of the developer and the consumer. So, what exactly will be the Implications of the implementation of RERA on the real estate market?

  1. Under the RERA, builders will have to now quote on the basis of the carpet area. This means, the consumer has to pay for the actual interior area that he gets to live in. This will make the quote more realistic and transparent and the customer gets a fair idea of the cost per square feet. The standardization also makes comparison easier.
  2. Currently, when a builder develops an apartment, the parking charges are charged separately and vary depending on the property. The RERA requires that the parking charge should also be transparently mentioned as part of the sale agreement.
  3. The RERA will require all real estate agents to register themselves with the competent authority. This registration will ensure that gullible customers are not fleeced by unscrupulous real estate agents.
  4. RERA also contains specific provisions pertaining to timely completion of projects by builders. Delay in the completion of projects will make the developer liable to a monetary penalty as well as imprisonment up to 3 years.
  5. RERA also contains a provision that if there is a delay in delivering the project or if the buyer is not satisfied with the property in a way then a refund can be claimed within 15 days of buying it.
  6. The builder / developer needs to make full disclosures about Title report of the land, any legal cases outstanding, any likely encumbrances, intention of the promoter of using the FSI (floor space index), use of construction technology, design standards etc.
  7. State level regulatory body will be formed which will act as the primary agency to address all real estate complaints, disputes and issues. The key focus will be to address the grievances of real estate customers.

Now that we are clear what the mandate will bring both to the developer and the buyer, the million dollar question remains is that ‘will it bring that big impact in the pricing?

The answer to this may not be as straight as an arrow. While the new rules call for a much stricter compliance and transparency, which may push the real estate prices up especially for the new launches, the large amount of inventory overhang in the system, will probably keep the price rise at bay till the supply gets over. Unlike in the past where builders had a field day with the projects, various RERA provisions would now ensure stricter control on management of funds and timely delivery of projects. When a RERA compliant project gets launched, the cost to a builder is expected to go up and therefore the prices will soar. With the implementation of RERA, the overall costs of development of real estate projects are expected to go up and the same is likely to result in an increase in the prices of the real estate projects.

At Avant Infra, we follow the mandate diligently as a developer/promoter and all our projects are RERA registered. We are the preeminent real estate developer in Mumbai believing in transparency, uncompromising dealings, and being completely customer-centric. We are known for forging and nurturing long-standing relationships built on trust, ethics and our expertise. Our new development, Avant Heritage in Jogeshwari is currently the talk of the town due to its colossal structure, prime location and it also falls under the ‘affordable luxury housing’ tag. Three majestic towers of 23 floors each having lavish 1, 2, 3, 4 bhk duplex penthouses with modern amenities such as grand designer double height entrance lobby, temperature controlled Jacuzzi & swimming pool, terrace garden and rainwater harvesting, make it a dream home of many.

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