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Real Estate Regulatory Authority (RERA) bill was passed on 2013 by Indian National Congress and got approved in March 2016 for 13 states and union territories.Image source(ATIREM)Here are the list of states and union territories where RERA act have been notified.Andhra PradeshBiharGujaratKeralaMaharashtraOdishaUttar PradeshChhattisgarhAndaman & Nicobar IslandsChandigarhDadra & Nager HaveliDaman & DiuDelhiLakshadweepTamilnadu and few other states have also framed their draft rules of RERAWhy RERA:There is a great need for homes in India. Most of the people face great loss in real estate due to fake promises made by few real estate builders. It is the one of the greatest revenue for the Indian government. As government failed to observe these many people has become victims. To eradicate this problem government has passed RERA to protect homebuyers.Some of the problems faced by people are:Delay in giving the house to the buyers due to some reasons like delayed funding etc.Selling of same flat/house to multiple buyersContracts made in favor of builders alone.Benefits of buyers from RERA :The buyers will pay only for the carpet area (area within the walls), not for the built up area.For years buyers have to pay 20% of the total amount for booking. But with RERA buyers can pay only 10% of the amount that too paid only after the agreement for sale is made by the builder. Builders have to maintain a separate bank account for each project.The builder should rectify the structural defects if any for 5 years (earlier it was 2 years) after the possession is handed to the buyer. The defect must be corrected within 30 days of the complaint. We, at Cityrene builders, use GFRG to prevent the damages like cracks, water seepage in the building.Buyer has the rights to know the project plan in detail and also to know each stage of completion.Developers have to deposit 70% of the money in a separate bank account to meet the cost requirement of the project. Also, the buyers will give cost for the project at each stage of construction instead of getting total money of the project.RERA is mandatory for all commercial and residential projects, which are more than 500 sq.m. or 8 apartments must be registered before starting the project.Developers can sell the project only after the clearances.Website owned by the builders is registered to ensure correct information about details of the development plans, financial details, plan details, registered agents and consultants etc.Builders have to pay a penalty of 10% or even imprisonment in-case of not honouring the commitment made by them.Builders have to register each project with the local housing regulatory body. The builders or the developers have to submit building plans, approvals.During the process of construction if there is any change in the plan, should be informed and approval before making the changes.How builders can be benefited by RERA:Builders can impose penalty to the buyers for not paying dues on time.Builders can approach the authority in-case of any issues with the buyers.Conclusion:Establishment of RERA act will enhance the real estate market in India; will bring the buyers confident back on the builders. This act will also reduce the fake real estate buyers. While buying a property builders should ask the builders for their approvals and certifications of RERA and can confidently approach the builder. If anything goes wrong in the future buyers can approach the authority.Check our other blogs here.

There’s no 1 common Factor as to why the property prices are stagnant in India.However there are 3 powerful visible factors behind this :DeMo: Who invests heavily in Residential, Commercial and Retail Properties? A Businessman. Until 8th November 2016, They would buy Properties in such a way that a certain percentage of the property value would be paid via Unaccounted Cash (Black Money).This would benefit them asThey had to pay lower taxes including Stamp Duty as these taxes would be charged based on the Agreement Value of the Property.Their Black Money would be put to use.After Demonetisation was announced in India, i.e withdrawal of all the currency, There was limited or no cash in the market to be parked in Real Estate Assets. All the Brokers, Builders and Investors Who’d usually be a part of transactions involving major cash component had to change their way of doing business.At a point where more than 95% of the Indian Developers would sometimes accept 30% , 40%, sometimes even more than 50% of unaccounted cash, The scenario is completely different now (2019); Developers still take unaccounted cash but upto a limited extent, E.g. 5%. Due to this, Many Investors have vanished from the Real Estate Market.2. RERA. The Real Estate Regulatory Act. Before this Act was introduced, The Indian Real Estate Sector was so unorganised. No one could find out if the builder would utilise the funds received from customers in some other activity.Real Example : A Mumbai Based Builder sold one flat to 3 to 4 Customers. Not only that , He fabricated a Completion Certificate and due to other illegal activities, at least more than 500 homebuyers were left hanging and none of them got possession for the flats they’d booked and paid for.This same builder also invested in other ventures i.e Automobile Franchisee Dealerships. It’s not a crime to invest in other ventures but one should do that with their money and not the customer’s hard earned money.There’s no scarcity of such builders in our country.Even though RERA was the best thing that happened to the Indian Real Estate, its transparency factor revealed all the fly by night Developers.How?When RERA came to effect on 1st May 2017, all the developers were supposed to register their ongoing projects with RERA. Only those developers would be able to register their ongoing projects who had all the approvals in place.So it was evident that an ongoing project which wasn’t registered in RERA didn’t have any approvals in place. Most of the Developers under this category are in prison.Since lakhs of Indian homebuyers got stuck due to stalled and delayed projects, lot of people lost faith in the Indian Real Estate Market anticipating a fall in property prices.‘This is not the right time to invest since the prices can go down later’ - a Typical Indian’s opinion as of 2019.Not just an investor, but even homebuyers who want/need to buy a house are willing to wait further expecting a correction in prices.3. Increasing Demand-Supply Gap : Even though the housing demand has been stagnant since the past 5 years, The Supply has increased a lot. As of 2018 End, There were around 2,50,000 Unsold Flats in Mumbai.There are so many new launches especially in metropolitan cities. The Luxury Housing Market’s performance has been the worst.The situation is such that not only have the current developers launched housing projects, but also the companies which were never into real estate have started Monetising their available land parcel by entering the Real Estate Market.Bombay Dyeing is in the business of Textiles. They had an old land parcel of 53 acres in Bombay. They ventured into Real Estate via the firm Bombay Realty anticipating a 24,000 crore Free Cash Flow from the 2 planned projects spread over 53 acres since their land cost will be 0.Raymond is in the Business of Fabrics. They hand a land Parcel of around 125 Acres in Thane,Maharashtra. Guess what they did about it? Raymond Realty.Century Textiles and Industries Ltd is a textile, paper export manufacturing company. Having a Land Parcel of about 130 Acres in Kalyan, Maharashtra and being aware of the fact that Affordable Housing Segment is growing due to the political support and a typical Indian’s financial feasibility, They Launched a Residential project in Kalyan.Well there are various other reasons for the Real Estate prices being stagnant. However i found these 3 to be directly related to your question.

The Great Indian Banking & real estate Scam:I want to bring attention to a disturbing nationwide organised scam that you are a familiar with, but most don’t quite understand the “fraud” part of it. And like some of my answers do, it may ruffle some feathers. But truth must be told. Here it is:Do these pictures seem familiar to you? Go to the outskirts of any major city in India, (for example take Noida & Gurgaon which are on the outskirts of Delhi), you see miles & miles of semi built structures that just stay dead still & never get completed. All these buildings started in different years, but surprisingly, they all face “financial trouble” just after the basic structure is built. Why don’t we see buildings that stop in-between, say after 4 floor or 8 floors?The answer is an organised scam played by the state governments, builders, banks & accounting bodies. This is how it works -The builders sell you construction linked plan. You assume that it's a fair plan as the builder will charge money as and when the construction progresses and it is in builder’s interest to complete the project with speed. Looks fair for all ? But this is exactly where the catch is!The so called “construction linked plan” is a sham designed by the agencies listed above, backed fully by the government and banks. Let's look at the reasons:What is the scam here ? The payment plan is designed in a way that you have to pay 90% of the price of flat “at the laying of the top floor of the building”. By this time the builder has spent only 50% of the project cost. Most of the money is needed later in the finishing work - electrical wiring, plumbing, flooring, paints, lifts / elevators, external work, parking, basements, government permissions for water, sewage, power, etc. You get the logic here. Now the builder is sitting on neat 40% profit (90% - 50%) and all that he is left to “earn” from you is 10%. Why would he spend another 30% money just to recover 10% from you? He stops work right here! You’re thinking — he should not stop because there is a timeline to deliver the project. But wait, what if he misses the deadline of delivery? There must be some penalty, right? Check the agreement - ah well,……… keep searching! So if developer delays the project, there is no penalty due on his part (or at best it is princely sum of Rs 5 per sq feet per month…. which comes to a meager 1% interest!). But if you delay his payment, interest charged is 12% to 18%. Ever heard of one sided agreements? Which business would not seize this opportunity to “borrow” free money without interest?Why did the banks & RBI support it The befitting supporting actor award here goes to the banks & RBI. They lend “you” the money on “your” credit report. Banks don’t finance the builders for land purchase. They are also very shy on financing the builders for construction (rates are more than 15% to 18%). But wait, consumers can always borrow at 10% & “pay” the builder. So essentially, the consumer is “financing the builder” in the name of “purchasing the apartment”. Oh & did I tell you the best part? This money is without any interest for the builder as we see above. So a developer to whom no bank lends money below 18% and that too is seen very risky, can “get easy finance from the same banks” at 0% interest rate, all in the name of consumers! While RBI could have set this right just by changing the construction linked payment schedule through banks, it chose to sit aside with eyes shut, while the banks & builders continued to fleece customers.Where did the money go ? Well, democracy is an expensive way to run governments, especially in developing countries. Every state government has been enjoying the party with builders & this was a “legal” way to pull huge credit money from the banking system on the books of the “reasonably wealthy middle class” who was sold the idea of buying a house as it “appreciates forever” with tax breaks. Builders diverted money to the political parties to get further favors on land & permits. Secondly, the builder has used this surplus 40% “profits” to buy new land parcels so as to launch more projects & collect even more surplus interest free money. The land prices were assumed to be appreciating forever as more and more money was being pumped out of the banks. The music had to stop some day. Seems like it has.What about the consumers? The “middle class” consumer will continue to pay his monthly installment to banks, while their money has been siphoned off by the builders, political parties, government officials and the banks. The apartment that was sold as 40 lacs will eventually cost 60 to 70 lacs considering the delayed possession, not to mention some cases where money is lost forever. You dare not default since you are just a retail consumer. Don’t dare to become an industrialist who can default & live happily ever after. State governments are all hands in, trying to keep existing projects out of RERA. Even if these are included in RERA, try fighting the legal battle to get decision from regulators. Then move to Appellate Tribunal (yes, this comes before the High court), then the High Court & finally Supreme Court. Can you hold till 20 years or rather take the apartment on builder’s terms, whenever he feels like offering the same to you?Talk of organised banking loot by the government, this is it. If it feels like your story also, you're not alone. But please never assume that property prices don’t fall. Staying on rent is not that bad.And don’t you ever buy into the hype !Afterthought and updates -I thank readers for positive feedback and questions on this article. Since lot of you have asked this, I must add how life would change after RERA for “new projects”. Well if the legal channel is too prolonged, there is no point of fighting the legal battle as time is money & builder doesn’t pay penalty. So outlook is not bright & I’ll quote examples.Have the builder agreements been revised anywhere ? Even if these are, there might be fine print about “force majeure” which allows builder to get away with delay in case of “circumstances beyond his control”. Check your agreements. Also, has the payment schedule changed ? Now to argue this, please follow legal process, will you ?Finally, as far as “pro-activeness to prevent misleading advertisements under RERA” is concerned, a very prominent National level builder published half page print advertisement in major newspapers recently about a new launch with all fancy imaginative pics (RERA allows only actual site pictures for advertisements). No action on the builder so far. Why? Below the advertisement (in micro font size) company stated the disclaimer: “…….. the said information should not be construed as an advertisement under the applicable laws ( RERA). Nothing on this material, constitutes advertising, marketing, booking, selling or an offer for sale, or invitation to purchase………….” Can you beat that?Every major builder website that you go on has all the fancy pictures of the apartment that will never materialize. But hey, you can’t raise this aginst them. Why ? Because as you visit the website, a window pops up where “every possible disclosure” is made & you “accept” to visit the website. Now the builders are free of any liability. If this alll what RERA was trying to achieve by “only actual site pictures” , the what was the noise about ? And if you still hope that politics will play out against the builders, think of this ? Who can only vote in a “rich” minority. but who provides money to the government ? So who is likely to win ?A quick status check on RERA:Some states such as Uttarakhand, Orissa and Bihar have adopted the central RERA rules, more specifically around the keeping the funds collected from buyers in an escrow account. The Uttar Pradesh RERA rules are silent, which builders have taken advantage of to siphon off funds. Good luck Noida !The biggest issue is the lack of execution of RERA orders by builders and multiple forums for grievance redressal.A mere RERA registration does not guarantee that a project will be delivered on time. All under-construction projects are still in a limbo, despite RERA. That is where most money is blocked. New launches ? Lets talk in a couple of years. We’ll see.There are also instances where realty companies have given different timelines to homebuyers and the authority. can you beat that ? So if they delay the project, the authority may say that the project is on track as pper their timelines. Recall that fancy advts “are not a part of sales agreement or promise of delivery”. What is the point of RERA then ?Meanwhile, I’m yet to meet a person who got justice under RERA. Are you still hopeful ? I’m less optimistic on this.Feel free to mail or write to me on twitterHonest - Unbiased - Simplified, as always.