A new regulator for the real estate sector was put in place with the RERA (Real Estate Regulation and Development Act) coming into effect on May 1, 2017. Henceforth, all states and Union Territories in the country will have their respective authorities.
The two sides of RERA
With RERA, comes more compliance, accountability, and transparency. On the other hand, there is a chance that it may trigger an increased cost on consumer pockets. Stricter compliance standards could delay new launches, and new regulations may lead to higher rates for construction. Additionally, existing properties that are under construction, will have to register under RERA. If they do not, they could face penalties. This could increase the demand for existing inventory and even increase prices a little in the short term.
Additional Read: What is RERA? Know all about the Rera Act
Rates per square feet
A significant change of the RERA is that real estate will have to be sold based on ‘super area or carpet area’. Before passing this act, the selling real estate projects was based on ‘super built up area’. Generally, the carpet area is generally 30 to 35% lower than super built up area. Though it is expected that builders may increase the per square feet prices to balance these reduced rates under the new rules, buyers will have a clearer picture of the actual area of the property before making the purchase.
Rescue of the buyers
RERA will also ensure timely delivery of projects. Should builders fail to meet these deadlines, they will have to pay a 12% interest to the buyers. However, this pressure from RERA could be transferred from builders to contractors, which may result in higher construction rates, thus, increasing the cost of properties. RERA’s restriction on the management of funds, cash flows, open car parking sale, rules related to common areas, compliance costs etc. may translate to the property price rise for the end consumer.
Additional Read: How to Find Out if Your Home Builder is RERA Registered?
Right now, is the right time
All said and done, right now is the best time to buy a home, especially if you are looking to avail a home loan. There has been a price correction on most real estate, and it is no longer selling at the impractically high prices it commanded a few years ago. Home loan interest rates have been cut, in fact, they are at the lowest they have ever been since 2008. In the 30-lakh bucket, interest rates have been reduced by about 15 basis points for women borrowers, and 10 basis points for other borrowers.
According to a CLSA report, the housing affordability has improved in India and is the best since 2005. This is because of the dual impact of rising incomes and stagnation of housing prices. With the government aiming to boost the affordable housing segment, most factors are in the buyer’s favor.
To cut the story short, there is probably no better time to plan to buy a home with the help of home loan. Go ahead and make your dreams of owning a home come true.