why people love to live in noida & Greater Noida

Greater Noida West. Noida Extension has been rechristened as Greater Noida West. The sectors are laid out astride the road from Noida city center moving east and then south towards the junction near Bodaki at Greater Noida, the road is under construction and would take a few years for completion. With the major spate of litigations having been resolved this sector is booming with real estate activity. A number of residential and commercial projects are lined up for completion in the next 1 to 3 years. The Roads are well laid out with connectivity towards Noida as well as Greater Noida

The real estate of Greater Noida West is gradually improving. There are different types of flats in Greater Noida west of different sizes, from 1-BHK to 3-BHK units. There are apartments and independent houses too in Greater Noida West. There are property dealers/ builders in Greater Noida west like Realty 360 Degree and Divino Estate Services, who are constructing several flats and apartments in this locality.

Connectivity with nearby Greater Noida West localities

• The distance from Greater Noida west to Indira Gandhi International Airport is 50.4 kilometres.

• The distance from Greater Noida west to Hazrat Nizamuddin railway station (Delhi) is 34.4 kilometers.

Schools in Greater Noida West and other social amenities

The various schools include the Business School in Delhi and St Thomas College.Hospitals in Greater Noida West include the School of Dental Sciences and Sharda Hospital. Banks in Greater Noida West are Punjab National Bank ATM and Syndicate Bank. The shopping malls in Greater Noida West are Habi Tech Qube Crystal Mall. Popular restaurants in Greater Noida West are Spice Affair and Lego House.

 Price trends in Greater Noida West

The price trend in Greater Noida west from October 2016 to December 2016, for multi-storey apartments, has been as follows: The highest locality price is Rs 3,880 per sq ft, the average locality price is Rs 3,248 per sq ft and the lowest locality price is Rs 2,615 per sq ft.

Reasons to invest in Greater Noida West

Greater Noida west is one of the fastest-growing localities of Noida. Over the years, this area has grown rapidly and is today one of the planned cities of Asia. The area is close to all the important places. This locality is mainly an industrial area. The transport system of this area is good and the residents can smoothly travel without facing any hassle. Property prices are rising, as the demand for this area is increasing among the people. Investors can invest in this area without thinking of losses.

Ready To Move in 2 bhk – 30 Lacs to 38 Lacs 

Ready To Move in 3 bhk – 38 Lacs to 45 Lacs 

Under Construction 2 bhk – 27 Lacs to 33 Lacs 

Under Construction 3 bhk – 34 Lacs to 42 Lacs 

Existing Road Connectivity. Greater Noida is probably one of the best connected in terms of roads. An eight lane expressway connects it to Noida and further to Delhi. The Noida-Greater Noida road which is under advanced stages of construction will provide it an alternate connectivity to Noida City Centre as well as Ghaziabad, thus provisioning a ring connectivity.

Planned Roads. In addition to the above, the six-lane highway which connects Greater Noida to Ghaziabad has just been opened to the public a few days back. This road would further get connected to the Eastern Periphery Road. In the North and Yamuna Expressway in the South. The UP government has finally cleared the projects for the Eastern and Western Periphery roads, which would initiate a second phase of real estate boom in Greater Noida in years to come.

Internal Roads. The internal roads within the sectors are well laid out, generally all roads are bifurcated and four lane with greens belts. Greater Noida probably is the only district where the infrastructure has been planned and implemented before the real estate development has been initiated.

Metro. The approval for extension of Metro to greater Noida on two different alignments has already been granted by DMRC and fund allocation carried out, the work is to commence soon. Both the alignments will originate at Noida City Centre, one going via Greater Noida West to Bodaki and the other from Sector 50/78 (Noida) would follow the alignment along the Expressway to Pari Chowk and then further to Bodaki.

International Airport. The construction of an International Airport at Jewar (21 KMs from Formula 1) has got a push with the sitting MP from Noida Mr. Mahesh Sharma having been appointed The Minister of State for Civil Aviation. The project was turned down by the present UP government, though the land was acquired in 2001. The project went into cold storage due to two reasons, one as per rules a second airport cannot come up in vicinity of 150 KMs of an existing airport. Secondly, a second airport can come up only if the existing airport is working on full capacity, which is not the case with IG International Airport as it has been planned to cater for traffic till 2021. With an eye on the upcoming assembly elections in Up in 2017 if these rules are amended and the airport is given a nod, it would give the real estate sector a huge flip in Greater Noida.

Educational Hub. With almost all known and branded schools opening up their branches in Greater Noida the education sector has got a big flip. A number of well-known Universities like Galgotia, Guatam Buddha University have already come up and a number of colleges are coming up , making Greater Noida an educational hub.

Jaypee Formula 1. The Formula 1 track remains the landmark in Greater Noida. The track has given the real estate sector a huge boost on the Yamuna Expressway with a number of residential and commercial project having taken off. The Jaypee sports city which is coming up next to the track is a fully integrated project with an international cricket stadium.

Night Safari. The prestigious project for setting up the first night safari in India on Yamuna Expressway has finally taken off with Greater Noida Development Authority having called in the request for proposal.

Smart City. The central government is actively considering earmarking Greater Noida as a smart city as part of the ‘100 smart cities’ plan for infrastructural investments. If that happens real estate in Greater Noida will get an automatic boost.

Return on Investment. With property rates still as low as INR2000/- to 6000/- per sq. ft. the time is right to invest in Greater Noida. Greater Noida as on date has the lowest property rates compared to other suburbs of Delhi like Gurgaon and Noida, with high-value infrastructure projects lined up the property rates are going to soar in years to come yielding much higher ROI as compared to other parts of NCR, where the property rates have already reached their peak.

 2 bhk (900 – 1200 sq feet) – 8k to 10k per month + maintenance

3 bhk (1200 – 1800 sq feet) – 10k to 13k per month + maintenance

Location —

Noida Extension is a geographical part of Greater Noida and so called as Greater Noida West. It’s connected to Noida Mainland by a 6 lane bridge on Hindon river. This road connects the red light of Sector 71 Noida on one hand and Kisan Chowk of Noida Extension on other. All major residential development like Gaur City, Eco Village 1 and 2, Stellar Jeevan and Nirala Greenshire are in 2-3 km radius of this Kisan Chowk only.

Consistent Connectivity

More prominent Noida West runs parallel to Noida sectors and is associated with Noida City Center by 130 meters wide 6 path street. It is all around associated with NH-24, Noida, Ghaziabad and in addition Greater Noida, through turnpikes and multi path sector streets. Metro associating all parts of Greater Noida West with Noida and Greater Noida has been endorsed. Being near FNG Expressway, Greater Noida West is all around associated with Delhi as well.

Great Infrastructure

Spread over a vast land, Greater Noida West is one of the best-arranged districts of NCR, with a thorough Master Plan for Urban Agglomeration. The city has very much created an urban foundation, including a fantastic street, organize, seepage, sewerage, water supply and underground power framework, with an advanced vision.

The street arrange has been arranged in a way that the range does not require activity signals with a negligible probability of streets getting gagged. The base width of the sector streets is 12 m, which is more than that in Gurgaon. Besides, it is a standout amongst the most all around arranged areas in the NCR, with 22% green zone, the most elevated in NCR.

 Commercial Development

More noteworthy Noida West brags of all around daydreamed commercial and mechanical districts, pulling in corporate houses and MNCs for setting up their offices and offices. Various Commercial Spaces and inns are coming up in the territory, other than IT parks and Knowledge Park 5. The commercial advancement is currently balanced for a jump after the endorsement of an International Airport on the Yamuna Expressway. If you are looking for an office space in Gurgaon or Delhi, you must also add this location in your priority list.

Most Affordable territory of NCR

With the costs touching abnormal states in the Delhi, Gurgaon and Noida markets, Greater Noida West can, in any case, be viewed as a reasonable area in NCR with units costs going in a normal of INR 3,000/ – to 4,000/ – per sq. ft. Not at all like different zones, Greater Noida West is occupied, with a huge number of families routinely moving in.

What is Gst & Impact on Real Estate.

What is Gst & Impact on Real Estate.

The existing tax liabilities of homebuyers will remain largely unaffected after the introduction of the Goods and Services Tax (GST) regime. The GST Council has brought the real estate sector under the GST ambit partially through works contracts. These will be taxed at 12 per cent under the GST regime. Currently, a homebuyer has to pay several indirect taxes, including excise duty, value-added tax and service tax, which amounts to a tax outgo of about 11 per cent, excluding stamp duty. 

Under the new regime, all the other indirect taxes will be subsumed and a buyer will have to pay a uniform 12 per cent tax on the purchase of real estate, except stamp duty. This is true for under construction properties but not on completed, ready-to-move-in apartments. On the other hand, entire input credit — excise duty and Central sales tax on construction materials that are paid by developers — will also be allowed unlike earlier. 

Meanwhile, the government has told developers to pass on any benefits that they may avail under the new tax regime to the homebuyers. “The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/installments ... It is advised to all builders/construction companies that in the flats under construction, they should not ask customers to pay a higher tax rate on installments to be received after imposition of GST,” a government statement said.

There have been reports of developers asking buyers to make full or large payments before the new regime comes into force on July 1, saying GST would make properties costlier.

Here is the complete list of GST rates. 

GST In India

The Rajya Sabha had on August 3 and the Lok Sabha on August 8 unanimously approved the Bill to enable the rollout of GST, arguably the biggest tax reform in India in recent times. The approvals have paved the way for implementing the indirect tax regime within the Union government's revised deadline of April 1, 2017.

The Goods and Services Tax (GST) Council on November 3 set the rates for the new tax regime. These rates would range from 5 to 28 percent, with 12 percent and 18 percent as standard rates. While things of mass consumption would be taxed at the rate of five per cent, luxury would be taxed at 28 percent.

Finance Minister Arun Jaitley had on August 3 tabled the Goods & Services Tax (GST) Constitutional Amendment Bill in the Rajya Sabha, and initiated a five-hour debate on the landmark tax reform. The proposed indirect tax regime, which is likely to subsume 17 indirect taxes upon implementation, will remove the disparity in the taxation structure across the country and bring one uniform tax rate.

How Will GST Impact Real Estate?

The real estate sector is estimated to account for about five per cent of India’s gross domestic product (GDP) and is considered the second-largest employer in the country, according to an E&Y report from 2015.

However, the sector faces issues in terms of macroeconomic conditions and fiscal policy decisions. One such challenge is the management of the multiple indirect tax levies, such as VAT, service tax, excise, stamp duty and registration fees.

As we prepare for GST 'how it works' might already be on your mind. Since the GST is to subsume multiple indirect taxes, it will simplify tax compliance and minimize the scope for double taxation. So, there is clear reason for home buyers to cheer, even if they have to pay slightly more in case the standard GST rate is high.

On how GST will impact the real estate sector, Ankur Dhawan, the chief business officer (resale), PropTiger, says: "GST itself is expected to add about 2 percent to India's gross domestic product (GDP). That is a substantial boost to the economy. If the economy does well, obviously, there will be more demand for real estate, and it will be a boost for the sector."

Why A Slightly Higher GST Rate Might Be Acceptable To Buyers

Since buyers are not liable to pay any indirect tax for the purchase of ready-to-move-in properties, the impact of GST on buyers of resale properties is likely to be very little. In the case of under-construction property transactions, buyers have to pay value-added tax (VAT) and service tax. While VAT is a state levy and its rate differs from one state to another, service tax is a central tax charged at 15 per cent. Overall, the current taxes on home purchase are not low and involve mind-boggling complexities.

Most buyers of under-construction properties take home loans to fund their purchase and the whole mathematics involved in the home loan process is quite baffling, too. In most cases, buyers do not carry out a detailed study of the various taxes that they have to additionally pay and they make their investment plans based only on the value of the property.

What's In Store For Real Estate Sector

In the case of VAT, for example, there is little clarity on what amount is paid at which level, and what part of it is passed on by the developer to the buyer. Often, for want of more clarity on the VAT rate in his state – if at all the state is imposing VAT on real estate – a buyer has to rely on the clauses mentioned in his sale agreement with the developer.

Unfortunately, no amount of research helps the buyer know the right rate? Lengthy government documents are mostly interpretative in nature and if you are not a professional chartered accountant, you might get lost in the study, and yet get little success. On the other hand, if there is a clear uniform rate for one tax that includes everything that they need to pay in taxes to authorities, the whole payment process would become very convenient for the buyer. In such a case, even a higher rate would be more acceptable to him than a lack of clarity.

Why Will Developers Love GST?

Since the GST is actually expected to bring down the project cost for developers, this would mean homes would, in fact, become cheaper.

There are many taxes and duties that a developer pays on the procurement side, such as Customs duty, Central Sales Tax, excise duty, entry tax, etc. These are subsequently passed on to the final pricing of the units and, thereby, to the buyer. As GST proposes to roll multiple taxes into one, the cost of construction will come down. This will bring more liquidity into the market and boost home sales. Free flow of credit for developers will also translate into an increase in margin in their hands. 

"There are a lot of products developers procure for the construction of their projects on which there is double taxation at present. The cost they bear for these come to 20 to 25per cent of the cost of materials they are buying. So, with the GST rate, between 12% and 18%, it will reduce the cost of production for developers. This will be good for buyers, as developers will be able to pass a part of the benefit to them," Dhawan adds.  

For developers, the actual tax effect will be lower than the existing one mainly due to the input tax credit on raw materials that builders get against payment of taxes on inputs like steel and cement.

Moreover, the increase in tax is very less for major inputs. The indirect taxes on steel were around 17 per cent and that has now come to 18 per cent under GST, similarly for cement the taxes totalled to nearly 24 per cent which now has been standardised at 28 per cent. The GST rate for work contracts has also been fixed at 12 per cent.

"There is no doubt that GST will be a game-changer for Indian industry, including for the real estate sector, since it will subsume more than 16 major taxes and levies into a single consolidated tax. Additionally, the unified tax regime will stop the unwanted practice of double taxation, which hurt real estate and other sectors, given their cascading effect that inflated prices for end users. Though unorganised players are wary of GST’s impact, it will create a level playing field for organised entities; the former will now come within the tax ambit. With GST enforcing transparent transactions across all domains, this will be a blessing in disguise for Real estate developers too," says Aman Agarwal, director, KV  Developers, and a member of the Naredco governing council.

Through market mechanism, GST will impart more transparency to the sector, which faces a perception issue. GST would provide an audit trail for better control and monitoring of the sector.

GST Positive Towards Real Estate Sector

GST may bring a lot of relief to the real estate sector.  Supply chain mechanism in real estate sector to be revamped after implementation of GST.

Real estate sector is one of the most pivotal sector of the Indian economy. Real estate sector plays a vital role in employment generation in India. It ranks second just behind agriculture.The importance of Real estate sector can be understood with its average 5-6% GDP contribution and stimulating demand for more than 250 ancillary industries.

The real estate sector had a substantial growth of 22% in its private equity investments from 2015 to 2016. At the time of the third quarter of 2016, there was a 9% increase in investment for residential properties from the previous quarter

GST Regime For Real Estate

GST would bring a lot of transparency in the real estate sector and minimize unscrupulous transactions. Under the current tax laws, VAT and Service tax charged by different Contractors and excise duty, entry tax, octroi is paid on the procurements. GST law will increase the margin in the hands of contractor/developer by removing all the above-mentioned taxes.Now whether this benefit gets passed on to the end-consumer is unsure as pricing of real estate is driven by market forces than on cost principles.

Real estate sector enjoys a lot of benefits from facilities in SEZ and same are expected to be carried forward in GST.GST will help in filling the overwhelming gaps currently existing under the supply chain management process.

There will be many projects of developers which would require the transition from current tax laws onto GST. GST model law did not specify any provisions for the transition.

GST rate on Real Estate

Currently, the sale of land and buildings have been kept out of the ambit of GST but it is expected to be taxed within a period of a year. Construction of land and building will benefit from the rates declared for cement, bricks, and iron under GST.

Cement will be taxed at the rate of 28% under GST. It is higher the current average rate of tax around 23-24% but a lot of additional taxes charged over the average rate would be subsumed under GST.  Iron rods and pillars used in the construction of buildings is charged at the rate of 18% which is similar to the current average rate of 19.5%.

Bricks used in the construction of buildings and houses is taxed under GST at the rate of 28% except for the rate of ceramic building bricks which is kept under 5%. Currently, all bricks except the ceramic bricks are charged an average tax rate of 25-26% inclusive of all state and central level taxes. Logistics cost of transportation of bricks, cement or iron is going to reduce through the subsuming and streamlining of taxes.

In Real estate sector, there is a huge percentage of each project expenditure goes unrecorded on the books currently. GST will cut down this percentage due to cloud storing of invoicing. Real estate sector will also benefit with new tax law having a positive effect on all ancillary industries.

CONCLUSION

The impact of GST on real estate sector is expected to be neutral under GST. Though still, there is going to be a substantial benefit from GST as it will bring a lot of required transparency and accountability. Developers/Contractors would reap the benefit of many taxes which will be subsumed by GST.
“Real estate sector should be happy with GST even if the rate declared is higher than current rate”

 The switchover to the GST regime is undoubtedly one of the biggest tax reforms in post-independence India.  From July 1 2017, GST effectively cuts through a confounding Gordian knot of taxation complexity in the country. In other words, it replaces the multiple taxes levied by the central and state governments and will become subsumed of all the indirect taxes, including central excise duty, commercial tax, octroi tax/charges, Value-Added Tax (VAT) and service tax.

GST has been predominantly conceptualized around a 'One Nation, One Tax' philosophy and will:

• Help eliminate the previous cascading tax structure
• Ease compliances
• Create uniform tax rates and structure, and
• Help in reducing additional tax burdens on consumers.

However, the biggest game changer in GST is the introduction of Input Tax Credit, whereby credits of input taxes paid at each stage of production or service delivery can be availed in the succeeding stages of value addition. This makes GST fundamentally a tax only on value addition at each stage. 

This means that the end consumer will thus only bear the GST charged by the last dealer in the supply chain, with set-off benefits at all the earlier stages. To ensure that manufacturers, developers and service providers pass on the benefit to the final customer, the Government has included an anti-profiteering clause in the GST bill under section 171 of GST law. This clause clearly states that it is mandatory to pass on the benefit tax reduction due to input tax credit to the final customer. 

Impact on Residential Real Estate:

To say the least, the Indian real estate sector has been going through significant transform in the recent times. The recently implemented Real Estate and Regulation Act (RERA) has already started addressing the issue of non-transparency and affixes a level of accountability on real estate builders and brokers which is unprecedented in the history of the Indian property sector. 

For the residential real estate sector, the implementation of GST will definitely be a positive sentiment booster among property buyers. GST may not be instrumental in bringing down the prices of residential real estate over the short term. However, it will benefit all the stakeholders of the residential real estate sector, as the perception of the sector will improve on the back of a simplified tax structure and accountability being fixed at every stage. 

Benefit to Property Buyers:

A simple and transparent tax applied on the purchase price is the biggest take- away for property buyers. Under the GST regime, all under-construction properties will be charged at 12% (excluding stamp duty and registration charges). It will not apply to completed and ready-to-move-in projects, as there are no indirect taxes applicable in the sale of such properties. 

VAT (with rates differing from one state to another) and Service Tax together accounted for 7-9% of the ticket price for a residential property, which is 3-4% lower than the GST rate. However, due to information asymmetry, consumers were largely unaware of how VAT and service tax are calculated - definitely, the entire tax calculation was too complex for laypeople to understand.

Any real estate product comprises of three expense components, namely land, material and labour or service costs. VAT is calculated on material cost, and service tax is calculated on labour and service cost. It is very difficult for buyers to ascertain what components were included for calculation of VAT and service tax. 

The implementation of GST makes the calculation much simpler, since the buyer has to pay only a single Goods and Services Tax. Also, the builder must pass on the benefit of the price reduction he enjoys due to input tax credit to the buyer.

Impact on Affordable Housing:

The affordable housing sector, which is a major thrust area of the incumbent Government and is the cornerstone of its 'Housing for all by 2022' vision, will not be impacted by GST. This has been clarified by the announcement from the Finance Ministry, which indicates that there will be no tax under GST for housing projects which comes under the affordable housing scheme. 

Benefit to Developers:

In the previous tax regime, real estate developers also grappled with the challenge of multiple taxation. On various construction materials they purchased, builder paid customs duty, central sales tax, excise duty, entry tax, etc., thus creating various instances of multiple taxation. The cumulative burden eventually got passed on to the buyer. 

GST will eliminate all the other taxes, and the benefit of being able to claim input tax credit can also improve developers' profit margins. 
Major construction materials have not seen a major change in tax rate.  

• Cement will be taxed at the rate of 28% under GST, which is higher the current average rate of tax around 20-24%
• Iron rods and pillars will be charged at the rate of 18%, which is similar to the average rate of 20% under the old taxation regime
• Paint, wall fittings, plaster, wallpaper and ceramic tiles will be taxed at 28%, which is also similar to the previous average rate of 20-25%
• Sand lime bricks and fly ash bricks will be taxed at 5%, which is lower than the previous rate of 6%.

However, the marginal change in the percentage of these variables will make a huge difference as transportation and logistics costs reduce in the single taxation system. While there might be marginal impact on the real estate sector in the near term, we are definitely looking at a significant improvement in buyer sentiment and perception of this sector. Developers too will find the GST regime much simpler to work with, with the benefit of input tax credit being an added advantage.

KEY Points OF New RERA

What is the Real Estate Regulation Act (RERA)? Here is how it will help buyers

The Real Estate (Regulation and Development) Act, 2016 (RERA) will finally give India’s real estate sector its first regulator from Monday, May 1, 2016. The act was passed by parliament last year and the Union Ministry of Housing and Urban Poverty Alleviation had given time till May 1, 2017, to formulate and notify rules for the functioning of the regulator. RERA seeks to bring clarity and fair practices that would protect the interests of buyers and also impose penalties on errant builders.

So what is RERA? Here is a look at the real estate regulator and how it will impact the real estate market.

According to RERA, each state and Union territory will have its own regulator and set of rules to govern the functioning of the regulator. Centre has drafted the rules for Union territories including the national Capital. While many states are still behind on schedule for notification of RERA rules, many have notified rules and a regulator will start functioning. Some of these states are Haryana, Uttar Pradesh and Maharashtra.

Despite seeing a slump in the past three years, the ticket prices are relatively high and inventories are piling up. Low demand is also contributing to the reduced recovery of investment by developers. These reasons have deterred developers from reducing the ticket prices.

RERA seeks to address issues like delays, price, quality of construction, title and other changes.

Delays in projects are the biggest issue faced by buyers. The reasons are many and the impact is huge. Since the last 10 years, many projects have seen delays of up to 7 years. Projects launched after the turn of this decade have faced delays as well. Some have run into obstacles even before a brick was laid. The reasons include diversion of funds to other projects, changes in regulations by authorities, the environment ministry, national green tribunal etc and other bodies like those involved in infrastructure development and governing transport. In many places, land acquisition becomes an issue. Errant builders often sell projects to investors without the approval of plans, an unauthorized increase in FAR, bad quality of construction, projects stuck in litigation etc.

REAL ESTATE NEW LAW

•  It makes it mandatory for all builders - developing a project where the land exceeds 500 square meter - to register with RERA before launching or even advertising their project. Developers have been given time until July 31 to register

• Not doing so will invite up to a maximum imprisonment of 3 years or fine of up to 10% of the total project cost.

• Developers will have to submit as well as upload project details, including approved layout plan, timeline, cost, and the sale agreement, that prospective buyer will have to sign to the proposed regulator.

• Only developers who fulfill this disclosure clause would be permitted to advertise their project to prospective buyers.

• Real Estate Appellate Tribunals to be set up in every state.

•   As of now, the real estate sector was largely unregulated in India. If a consumer had a complaint against a developer they had to make rounds of consumer or civil courts. Now, in a case of any grievance, the consumer can go to the real estate regulator for redressal.

•  Developers will have to put 50% of the money collected from a buyer in a separate account to meet the construction cost of the project. This will put a check to the general practice by developers to divert buyer’s money to start a new project instead of finishing the one for which money was collected. This will ensure that construction is completed on time.

• The law is likely to stabilize housing prices. It will lead to enhanced activity in the sector, leading to more housing units supplied to the market

•  It will weed out fly-by-night operators from the sector and channelise investment into it.

• Builders will also benefit as the law has penal provisions for allottees who do not pay dues on time. The builder can also approach the regulator in case there is any issue with the buyer.

How its work other countries.

United Kingdom

There is no regulator to monitor development. The financial services authority (FSA), which is now part of the Bank of England, regulates almost all investments in real estate. The Property Descriptions Act, 1991, prohibits making false or misleading statements on property matters in the course of estate agency business and the property development business.(Source: Realty decoded: Investing across Borders by Ernst & Young and Ficci)

How will RERA impact real estate agents?

While the Real Estate Act aims to protect home buyers by laying down rules for agents and brokers, we examine the challenges in its implementation and whether it will ultimately lead to more trust among property buyers

Under the Real Estate (Regulation and Development) Act (RERA), which came into force on May 1, 2017, real estate agents will need to register themselves, to be able to facilitate a transaction. The broker segment in India, is estimated to be a USD 4 billion industry, with an estimated 5,00,000 to 9,00,000 brokers. However, it has traditionally been unorganised and unregulated.

According to Shubhika Bilkha, business head, the Real Estate Management Institute, “In more advanced markets, real estate brokers or agents need to register, be verified and certified, in order to facilitate a real estate transaction. As India’s real estate industry prepares for increased regulatory vigilance, organising this essential and yet, largely overlooked segment, in line with global best practices, is required. This will improve the overall transparency and accountability in the sector.”

 How will the inclusion of brokers under RERA, impact the industry and the buyers?

Once brokers are managed under the RERA regulations, investors’ and home buyers’ trust is likely to increase and this could lead to an increase in sales and revenue for both, brokers and builders.

Anil Pharande, chairman, Pharande Spaces says, “It will go a long way in cleaning up the sector and making it more attractive for all stakeholders. Customers will now be protected on all fronts and can make their purchase decisions with a lot more confidence.”

Sam Chopra, founder and chairman of RE/MAX India, maintains that agents are important stakeholders and it is an excellent move to bring them under the ambit of RERA.

“It will bring a lot of accountability in the industry and the ones who believe in professional and transparent business, will reap all the benefits. Now, the agents will have a much larger and responsible role to perform, as they will have to disclose all the appropriate information to the customer and even help them chose a RERA-compliant developer,” says Chopra.

Gaurev Kapur, managing director of Golden Bricks, points out that “Home buyers and investors put their hard earned money in properties, trusting the brokers and the builders. Unfortunately, some brokers sell properties where the title is unclear or the property is disputed, merely for their own financial gain. With RERA, all this cheating will come to an end.”

With RERA in force, brokers cannot promise any amenities or services that are not mentioned in the documents. Moreover, they will have to provide all information and documents to the home buyers, at the time of booking. Consequently, RERA is likely to filter out the inexperienced, unprofessional, fly-by-night operators, as brokers not following the guidelines will face hefty penalty or jail or both.

Are brokers ready for compliance under RERA?

So far, only around 70 brokers have registered themselves. Even the states are not ready with the infrastructure and resources, to implement RERA. “Brokers, especially the smaller ones, are worried about the increased cost of compliance, which will eat into their profits.

“Now, this sector will become an untenable marketplace for freelancers and part-time operatives because brokers will no longer be able to afford to operate without an institutional framework,” explains Pakshal Sanghvi, director, Sanghvi Realty.

Another issue, is that there is no time-frame for brokers to register themselves, or a body that could train and certify the brokers on guidelines. Shammi Sethi, director of Rare Earth, a real estate consultancy, feels that while it is a great idea to have a proper system, brokers’ interests should also be kept in mind.

“A lot of brokers do not have a clarity on the Act and are confused. It would take the brokers some time, to understand and abide by the norms, but in a few months, when things get clearer, I think it should be good for all,” he says.

 Success will depend on implementation

Experts point out that the success of the RERA, will depend on its implementation. The central government, hence, should monitor its implementation in all states and ensure that there is no dilution of the draft rules proposed by the government. Moreover, many states are yet to form their respective regulatory authorities, where an agent can register himself. Several industry stakeholders are also demanding a drastic reduction in the penalty imposed on agents in case of default, since the brokers’ commission is only 1-2 per cent of the entire sales value.