RERA’s Impact on the Real Estate Sector and your Home Loan Interest Rates
According to experts and analysts, the Real Estate Regulatory Act (RERA) may result in stimulating India’s real estate industry as quickly as in the second half of 2017. Here’s everything you need to know about RERA, which came into effect on May 1, 2016.
- Mandatory Registration: RERA makes it compulsory for all real estate developments and projects, whether they are commercial or residential, to register with it for transparent execution. This Act gave each Indian state the directive to implement this policy in one year.
- For Increased Accountability and Credibility: The idea behind the Act is to bring accountability and transparency into the Indian real estate sector, which is known for being unorganized and fragmented with fraudulent transactions becoming a common occurrence. The Act thus asks for compulsory disclosure of project plans and details including information pertaining to the promoter, project, land clearance and status. The developers will also be held accountable for project completion deadlines and all promises made to home purchasers.
- Increasing Consumer Confidence: A full disclosure of the above-mentioned details is sure to inspire consumer confidence and help in protecting the right of homeowners and purchasers. Once positive effect of RERA is also ensuring that homebuyers will get possession of their new houses on time. Secondly, it would help prevent scams and dupes in the real estate market and help consumers know exactly what they are paying for and get what they were promised.
- Leading to Reduction in Prices: All this is sure to result in a price drop in real estate, with a decrease in land prices up to 20% in some places, according to industry experts. For Home Loan borrowers, this could lead to a fall in Home Loan interest rates leading to a reduction of their Home Loan EMI.
- Compounding Already Low Home Loan Interest Rates: The RERA will also help in further lowering Home Loan interest rates and Home Loan EMIs for new Home Loan borrowers, which were already lowered after demonetization and other government initiatives. With Home Loan rates lowered, it is now more important than ever for new and potential Home Loan applicants to be aware of and improve their credit score for the ease of their Home Loan sanction from lenders.
- Giving a Boost to The Real Estate Sector: The lowering of Home Loan interest rates due to RERA and other affordable housing policies is expected to be a catalyst in increasing the number of homebuyers and Home Loan borrowers. Increased transparency of the real estate sector from the buyer’s point of view has encouraged more first-time buyers. This is expected to greatly support the growth of real estate in India between 2017 and 2018.
- Keeps the Relationship Between Homebuyers and Real Estate Developers Equal and Fair: With the new set of compliances in place for developers, RERA finally puts buyers and developers on a level playing field. When it comes to penalties, both will now pay the same rate of interest in case the buyer delays payment or the seller delays giving possession. This equality was missing in real estate transactions in the past.
RERA’s long-term view is to impact the real estate sector for the better, giving homebuyers clarity and lowered costs and making developers more accountable and thus, more efficient. It couldn’t be a better time to take a Home Loan at low interest rates with a reputable lender and take advantage of RERA while making your dream of becoming a homeowner come true.