Living in Prestige Park Grove, a prominent apartment complex located in Whitefield, Bangalore, one can witness the significant impact of the Real Estate Regulatory Authority (RERA) on the real estate sector. The introduction of RERA has brought transparency and accountability to the real estate industry, leading to a transformation in the way real estate financing and investments are made. In this article, we will explore the impact of RERA on real estate financing and investments in India.
Introduction to RERA
RERA was implemented in May 2016 to regulate the real estate sector in India. It aims to protect the interests of homebuyers and promote transparency, accountability, and efficiency in the real estate sector. RERA has made it mandatory for developers to register their projects with the regulatory authority, disclose all project details, and adhere to strict timelines for project completion.
Impact of RERA on Real Estate Financing
Increase in Investor Confidence
The introduction of RERA has led to an increase in investor confidence in the real estate sector. The transparency and accountability brought in by RERA have made real estate investments more secure and reliable. This has resulted in a surge of investments in the sector, which has led to the growth of the real estate financing industry.
Enhanced Creditworthiness of Developers
RERA has made it mandatory for developers to register their projects and adhere to strict project completion timelines. This has enhanced the creditworthiness of developers, making it easier for them to obtain financing from banks and financial institutions.
Introduction of Escrow Accounts
RERA has made it mandatory for developers to maintain a separate escrow account for each project. This account can only be used for project-related expenses, and withdrawals can only be made in proportion to the percentage of project completion. This has ensured that developers do not divert funds from one project to another, leading to better project management and timely completion.
Impact of RERA on Real Estate Investments
Increased Transparency and Accountability
RERA has made it mandatory for developers to disclose all project details, including the carpet area, layout plans, and project approvals. This has increased transparency and accountability, leading to a reduction in fraudulent practices in the real estate sector. Homebuyers can now make informed decisions and invest in projects that are registered with RERA, ensuring that their investments are secure.
Protection of Homebuyers’ Interests
RERA has made it mandatory for developers to adhere to strict project completion timelines. In case of delay in project completion, developers are liable to pay compensation to homebuyers. This has protected the interests of homebuyers and ensured that they receive possession of their homes on time.
Increase in Demand for Affordable Housing
RERA has made it mandatory for developers to disclose the carpet area of the apartment, which is the actual usable area, and not the super built-up area, which includes common areas. This has led to a reduction in the cost of the apartment per square foot, making it affordable for homebuyers. The increased transparency and accountability have also resulted in an increase in the supply of affordable housing, leading to a surge in demand for such housing.
Conclusion
RERA has brought in significant changes in the real estate sector, leading to transparency, accountability, and efficiency. The real estate financing and investment industry has witnessed an increase in investor confidence, enhanced creditworthiness of developers, and the introduction of escrow accounts. The real estate investment industry has seen increased transparency and accountability, protection of homebuyers’ interests, and an increase in demand for affordable housing. RERA has been a game-changer in the real estate sector and has made it a more secure and reliable industry for homebuyers and investors.
