RERA Revolution: Transforming Industry Standards For Generations - Details

The main reason to set up RERA was to protect the consumer, the government also created the authority to regulate the industry and provide protection for the developers. Our experience with RERA helped us in resolving disputes with customers effectively.
RERA's Impact on Consumer and Developer

RERA's Impact on Consumer and Developer (Image Source: iStockphoto)

For a long time, real estate development was considered a murky business. While some of the negative aspects were eliminated over the years, the terrible treatment faced by a large number of home buyers at the hands of developers continued. Every downturn in the market led to developers getting financially cash-strapped, and the brunt of this cash flow crisis was borne by customers. Customer confidence in developers was at an all-time low.
RERA Introduction and Initial Reactions
The central government decided to bring in an act (RERA) to protect the home buyer in 2016. There were apprehensions from a segment of builders, and homeowner interest groups heaved a sigh of relief but continued to hold their breath, not knowing how the law would be implemented. Despite existing laws like the Maharashtra Ownership Flats Act of 1963, customers continued to face challenges.
Implementation of RERA
The first question I got to ask was whether RERA would follow the path of MOFA and continue to be a tiger on paper or would it be implemented? If implemented, would it be to the letter of the law or to follow the spirit behind the act? As things unfolded, we realized there was a genuine intent by the government to clean up the industry and protect the customer.
Impact on Warranty and Competitive Dynamics
At this time, we were the only developer in the country who was offering a 5-year warranty for 10 years before RERA made it mandatory. The warranty gave customers confidence to buy from us and provided us with a competitive advantage. Overnight, RERA made providing a warranty for 5 years mandatory for all projects.
Financial and Operational Effects
On the financial side, implementing RERA was easy for fiscally disciplined, well-capitalized promoters. It was also easy for those who were customer-focused. Some developers couldn't keep up and decided to leave the business altogether, which was advantageous for us.
Balancing Consumer and Developer Protection
While the main reason to set up RERA was to protect the consumer, the government also created the authority to regulate the industry and provide protection for the developers. Our experience with RERA helped us in resolving disputes with customers effectively.
Future Outlook: Construction Quality and Financial Closure
As we hit the 8-year mark, the authority is now looking at construction quality and is talking about the grading of promoters. Looking forward, I believe the next natural step would be to focus on financial closure of projects to protect customers during market downturns.
I believe RERA has been fabulous for us. We have had to raise our standards to compete, and customers come to us expecting more. We have seen customers finally willing to pay for quality and delivery assurance. In the long run, only players looking at creating a multi-generational business will be left in the industry.
This article has been written by Mr. Rohit Gera, Managing Director, Gera Developments
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of Times Network.)
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