Hyderabad: The Real Estate Regulatory Authority (RERA) will place the sector on a level-playing field, on par with other industry verticals, but the first two years will be a testing period for all the stakeholders, experts have warned.
After the challenging transit phase, the real estate sector will further flourish as the gross state domestic product (GSDP) growth rate is hovering over 10 per cent. The Credai, Telangana chapter, has demanded scrapping of GO 86 that stipulates a mortgage clause for builders. With the Real Estate (Regulation of Development) Act, 2016, being implemented, investments in real estate will be as safe as gold and fixed deposits, the Telangana Developers’ Association (TDA) said.
TDA president G.V. Rao said: “The first two years are expected to be challenging and stormy. RERA officials need to strike a balance between builders and consumers. Once RERA, which was established under the ACT survives the storm, then the real estate sector will further take off as it’ll be on par with any other industry with its own regulation system in place. Investments in realty will increase as this sector offers attractive returns when compared to gold and fixed deposits.”
The RERA will become operational in the state on August 1. All real estate projects been approved after January 1, 2017, will come under the RERA. Construction on plots that are bigger than 500 sq. yards and apartments with over eight flats need to be registered with the RERA. Registration is mandatory not only for builders but also for agents. It’s estimated that over 2,000 projects in Hyderabad are expected to be registered under the Act.
10 per cent area as guarantee bad idea: Credai
The Confederation of Real Estate Developers Associations of India (Credai) has requested the state government to scrap GO 86 in the wake of new law. Under GO 86, 10 per cent of built-up space has to be handed over to the municipal sanctioning authority through a notarised affidavit by the owner. It is returned after the local body attests that the builder has stuck to norms. Mr C. Shekhar Reddy, past president, Credai-National, said earmarking 10 per cent of built up space was a major deterrent.
Mr Gummi Ram Reddy, president, Credai, Telangana Chapter, said, “This GO came 10 years ago to avoid deviations and protect buyers. Now, this GO exists only in TS and AP. With RERA coming into the picture, we don’t need such a clause.”
He said Credai had suggested to the government ensure automatic approvals for water, electricity, occupancy and no objection certificate along with project approval under Rera. “There should be a single window system for all approvals,” he said. According to the Act, builders need to park 70 per cent of the money received from home buyers in an escrow account and must be used only for the purpose of the ongoing project. This money can be withdrawn in proportion to the percentage of completion of the project or set off against defaults. “Keeping 70 per cent of project cost in an escrow account wouldn’t be a problem after two years,” said Mr Rao.
