Happy Homes

By on August 19, 2017
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The new Real Estate Regulatory & Development Act (RERA) is expected to boost quality in construction and timely delivery, and developers with a head start in these areas are likely to gain a larger market share

In the short period between November 2016 and July 2017, we have seen the implementation of demonetisation, the Real Estate Regulatory & Development Act (RERA) and the Goods & Services Tax (GST). 
While RERA is a result of the collective misbehaviour of a large section of developers, the outcome 
of a highly regulated, transparent, delivery-oriented law will hike prices 
for this low-risk environment. The question however is: when will the demand-supply equation allow prices 
to increase? 
The changes in measurement (carpet area and proportionate changes for common areas) combined with new methods related to parking charges will render comparison of the pre-RERA, pre-GST with the post-RERA, post-GST impossible and eventually, a new metric may emerge. 
With RERA and GST, the real estate industry will become more transparent, organised and increase the buyer’s trust in projects. It will weed out fly-by-night operators, leaving only professional real estate developers in the market. 
Consequently, developers have to rethink their entire approach to business. There will now be a pressure to deliver projects on time, which in turn will cause contractors to demand higher rates for construction as the pressure transfers to them. The customer will end up absorbing these costs. 
Prices will consequently rise mainly due to costs incurred on account of RERA and inflation. Since GST is not yet applicable to ready-to-move-in properties, developers will have to bear the tax burden as it cannot be passed on to consumers. Prices of apartments, which are ready for possession, will increase in step with the taxes. This will lead to a change in the quoted price by the developer hence the overall cost to the customer is likely to rise. 
For a long time, many developers profited by shortchanging customers, constructing houses illegally and using customers’ money without returning any value to them. Promises made were not intended to be kept, or at least that was the norm. 

Read the full article in 'Viva Goa' magazine copy.
Viva Goa magazine is now on stands. Available at all major book stalls and supermarkets in Goa.

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