The government is planning on introducing a number of reforms that according to Vikas Oberoi will spike costs for Real Estate developers but bring good tidings for buyers. He has authority to comment on this issue being the chairman of Oberoi Realty-a registered real estate firm in India. Mr. Vikas expressed these sentiments during an interview in which he intimated that new regulations will increase development costs by a whopping 30-50%. On the flipside, these new real estate rules are great for buyers as they emphasize transparency from real estate developers.
The new rule establishes a state real estate regulatory authority (RERA) to handle any grievances against builders. The regulator is charged with control of the commercial and residential property. According to this rule, developers must have at least 70% of funds in the bank as an assurance that their projects don’t stall. This prevents situations where builders delay handing projects over to clients because money is caught up in many developments. Builders are not allowed to make changes to project plans without buyers’ consent. The buyer has one year after acquiring the property to demand after sale services should there be problems with the project. Those who violate these rules will get a 3-year jail term with or without a fine.
One of the new rules says that projects will only commence after all approvals have been given by the regulator. Any projects without necessary permissions will not enter the market in a bid to create a level playing field for developers big and small. All building companies will have to wait a little longer before they can eke profits from their investments and this translates into higher property prices for customers.
Some developers are likely to abandon the Indian real estate market due to these rules; leaving a small supply of property being sold at expensive rates but this doesn’t seem to rattle buyers who are ready to pay a little more than usual for the property. Stringent building laws create no room for shortcuts among contractors who often flout the rules. This is essential in preventing disasters that often arise from substandard buildings. By reducing the number of substandard property in India there will be huge demand for real estate in India.
This should be great news for project managers as it makes the wait for approvals well worth it. The new rules might be rigorous but act as an important catalyst for the Indian real estate scene. It will create demand for office space that builders can sell for high profits. Regulations demand more transparency about their operations if they want to attract clients to their property. It is a great thing for this industry as it ensures proper management of companies for the good of all parties involved.
These rules might be harsh for the builder but they are certainly a dream come true for buyers who were previously at the mercy of the developers. By regulating service providers in this manner the government projects increased proceeds from the real estate sector.