Friday, November 24, 2017

Real Estate, Post RERA !



“In law a man is guilty when he violates the rights of others. In ethics he is guilty if he only thinks of doing so”… Immanuel Kant.


Immanuel Kant was a German philosopher who is a central figure in modern philosophy. Kant argued that the human mind creates the structure of human experience, that reason is the source of morality, that aesthetics arises from a faculty of disinterested judgment, that space and time are forms of human sensibility, and that the world as it is "in-itself" is independent of man's concepts of it. Well, rights of others, ethics, morality & all these terms which Kant was interested in, seems when our real estate or people related to it (read builders), are least interested in, at least our govt thinks so & even society or common man agrees to it! Many of my fellow developers won’t like my statement but that’s what fact is as recently none other than our union housing minister himself twitted saying real estate is bad business & the reason is he being questioned about RERA implications on real estate! By now Real Estate Regulation Act nicknamed as RERA has become the most searched word than any property in our country & after nearly a decade waiting finally this year it has been implemented by Central Govt & accordingly by most States, with some modifications or alterations in the respective State. Maharashtra was first to form RERA authority & web site in place for registration & though as usual real estate industry lacks factual data yet I assume maximum registrations have been made under RERA in our State, showing our keenness for law abiding. Since long there has been numerous complaints from the clients of real estate industry, who were unprotected & being given ill treatment (read tortured) by the developers & there has been laws/ acts at State level like MOFA (Maharashtra Flat Ownership Act) but due to non availability of any authority than honorable courts in place, any complaint or dispute between flat holders i.e. buyers & the developers used to get dragged on for years & often it’s the buyer which used to become victim of this situation. To regulate the real estate sector, the government has come up with the idea of Real Estate Regulatory Authority (RERA) Bill which is expected to help buyers. RERA is supposed to protect the interest of the homebuyer and ensure timely delivery of projects. Real Estate Regulatory Authority (RERA) Bill was introduced in 2013 and finally the bill got approved in March last year. Although RERA is a central law, its implementation will depend on state governments, as real estate is a state subject. Maharashtra government had approved the Real Estate (Regulation and Development) Act (RERA). The deadline for online submission of realty projects under RERA was, July 31, 2017 & finally RERA has arrived in our State, its applicable for mostly every for every project where real estate development is being done in any form i.e. residential, commercial, co-operative societies, layout of plots & any such development. There is lots of information available on many portals about RERA & its applicability, so no point in using more word space here, let’s get in to the scene before RERA & now after nearly six months of its entry in real estate…
Since last few years even before RERA is applicable, real estate industry was going through a downfall & its reasons were multidimensional i.e. from constantly rising prices of raw material i.e. land to a slowdown in auto as well IT industries (read job cutting or recession) & do mind, though out of three basics, “roti, kapda aur makan”, the “Makan” i.e. home remains a top priority in our country for every family yet its affordability is equally difficult for most so its first on wish list by desire but last by pricing involved in the process! And hassles in buying a home(read legal home) are many, right from selecting a location, to get a developer with clean track record & then obtain home loans & then wait for getting possession in time & pay EMI’s which can unbalance your monthly budgets, so many fronts has to be considered before you finalize a home. And then off-late due to slow down many unprofessional entities, which has entered in real estate just to make more money has been reluctant to stick to their commitments to the customers which has spent their life time’s earning to buy a home. As well the policies of govt were opening up land use i.e. promoting more land to come under residential or buildable zone so as to remove appreciation factor from the real estate thus the profits were on reducing mode. And on the other hand govt keeps on squeezing real estate as milking cow in the form of every possible premium, taxes; policies like ever increasing stamp duty & ready reckoner rates. And at the same time production costs went on soaring with very high labor costs making cutting down the margin in real estate. All this made new launchings to slow down, delayed possessions of ongoing projects & real estate was in real cash crunch, which it has never experienced! And as a general practice of real estate utilizing funds from one project’s booking to another project or for new land buying, was common thing. The main reason for this is unlike other industries, banks don’t finance builders to buy lands so he has to use the available funds with him which mostly are in form of bookings from ongoing projects.

And then came RERA to straighten up the builders is what it has been advertised & it will take away the high profit margins from the builders, “just wait a little to book your home as prices are going to crash, that’s why we have bought RERA”, was the message sent to common man & booking stopped totally for a while! Lets understand, RERA does not & won’t ever decide rates of real estate but it’s a tool given to the customers to secure his rights towards the product he is getting i.e. a home. Do mind, no law can change any industry but it’s up to us how we are going to make use of the law to get that change in the industry & so is RERA! Common man was tiered of not being able to have any dialogue with builder or builders hiding the facts about the projects, such as sanctions, noc’s required by various govt depts., financing mode & all such details about the project. Actually all these details were part of the deal especially for a product for which you are paying today & the product will be delivered to you after two or three years! Unlike in any industry where you pay upfront & take home the product which you have paid for from the counter, may it be even a posh luxury car like Mercedes & that’s why other industries never needed such transparency about their industry functioning as whether any auto industry is in financial troubles or has acquired all necessary permissions for manufacturing, these questions are irrelevant when the customer is buying car of that company across the counter & in finished form, which isn’t the case with real estate industry!  Though still in our State situation is far better than other States, yet we too had (or have) our share of ill elements in the real estate, damaging image of entire fraternity named developers. Had it not been so then look around in our Pune city, agreed there may be people harassed by the developers on their home front but then there are definitely many more in numbers who are residing happily in their residences  built by some builder only & joke is, these are the people who writes against the builders! The govt thought of bringing in RERA thinking to make the builders or the real estate industry more transparent about the product, mainly on two fronts, possession commitments & financial mismanagement i.e. making the builder more accountable for the same. One more important aspect is, all the information regarding project will be available on-line & more than that an authority is in place to solve the dispute between the builder & the client in time!

This arrangement will definitely make the real estate transparent but do remember builders will be builders unless until the client don’t get aware by themselves & use the law to improve the system. At the same time real estate clients must understand, this weapon named RERA is to facilitate the bond between the clients & the builders & not to damage it further as any weapon works two ways always. I think that RERA will assure that only the builders, who stay committed to what they have promised, will remain in the business provided as clients you also remain aware about what has been promised to you. As earlier also there was MOFA & yet it was unable to protect the customers from the builders as no law on its own can protect anybody but we have to make use of that law in such way that no builder will dare to break the law & cheat clients! A builder, who stick to commitments & knows what is ethics & does the business with right mind would not been affected in any way by the RERA & neither he will be afraid of it rather I am happy that RERA will help the good builders to remain in business as well to curb the bad ones! Just one aspect here, can RERA be applicable to govt also? As when its question of transparency, commitments & ethical practices then look at the ever changing policies of our govt regarding real estate, making business nearly impossible. Right from delay in sanctioning development plans of the cities to providing basic civic infrastructure like water, roads, power, drainage etc, govt is failing on every front, so why not make the govt also party to RERA as in the form of collecting all the taxes as well premiums, govt also is beneficiary from real estate development is a fact!

Lastly as Kant said, there were ethical builders & non ethical builders, there are ethical builders & non ethical builders & there will be ethical builders & non ethical builders; all that a client has to do is deal only with the right builder & to judge that what better tool than RERA can be there!

-- 
Sanjay Deshpande 
Sanjeevani Dev.

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2 comments:

  1. Thank you for sharing such great information.
    It is informative, can you help me in finding out more detail on
    about rera act.

    ReplyDelete
  2. thanks, yes sure plz email me smd156812@gmail.com

    ReplyDelete

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Sanjay