MahaRERA impact on the Real Estate/Construction Business and impact on common people
The housing and construction industry plays a critical role in India’s development and economy, being the second-largest employment generator after agriculture. With a population of 1.4 billion, housing holds immense socio-economic significance. The real estate sector contributes 6-7% to India’s GDP, expected to increase to 10-12% in the next five years. The landscape of housing has evolved significantly in the last decade. Homebuyers, once in their mid-40s and tolerant of project delays, are now younger, educated, and more demanding, typically in the 25-35 age group. This shift necessitated stronger regulations to ensure transparency and accountability.
In 2016, the Government of India introduced the Real Estate (Regulation and Development) Act (RERA), with Maharashtra establishing MahaRERA in 2017. MahaRERA has transformed the real estate sector by enhancing transparency, financial discipline, and customer-centric practices. Homebuyers now enjoy better protection, access to comprehensive project details, and faster dispute resolution. This shift is evident in the reduced complaints for projects launched post-RERA, with only 3.5% of complaints against these compared to 23% for pre-RERA projects.
Key measures adopted by MahaRERA include mandatory public access to detailed project information, a requirement for developers to deposit 70% of funds into a dedicated account to prevent misallocation, and increased emphasis on timely project completion. Developers face penalties for delays, while homebuyers are also accountable for timely payments. Additionally, the introduction of a model agreement and non-negotiable terms protects buyers’ interests. To further empower homebuyers, MahaRERA is working on a grading system to help them assess projects more easily.
RERA has had numerous positive impacts on the real estate sector. It ensures timely project completion, safeguards against fund mismanagement, and improves construction quality by holding developers accountable for defects for up to five years. The industry has become more organized and disciplined, with developers adhering to stricter compliance requirements. This has also led to increased foreign investment, particularly from NRIs, thanks to greater transparency and credibility.
Despite its benefits, the real estate sector still faces challenges, particularly in accessing affordable finance. Developers pay higher interest rates compared to other industries, which adds to the cost burden ultimately passed on to consumers. Additionally, the complexity of real estate, with its reliance on multiple approvals and regulations, means that further reforms are necessary to ensure that all stakeholders, including approving authorities and financial institutions, are held accountable.
Overall, RERA has significantly improved the safety, transparency, and efficiency of real estate investments, creating a more secure environment for homebuyers. With continued development and the inclusion of all stakeholders, the future of real estate in India looks promising, with enhanced consumer confidence and a more organized, transparent industry.
Kapil Gandhi
First generation developer & MD, Sigma One Universal
