Why RERA is a ‘blessing in disguise’ for property brokers
The implementation of the Real Estate Regulatory Act (RERA) has transformed the way the real estate sector in India operates.The overarching regulatory framework defined by the Act provides for clear guidelines and way forward for not only real estate developers but property brokers as well.
It is now mandatory for all the firms and professionals involved in sale and purchase of real estate to register under the Act. As on 25 November, the Act has been notified in 27 states and union territories, while 8 states are in the process of notifying. The core provisions of the Act are largely similar in nature.
It is a sea change for property broking businesses in India who had been operating as any other local business with no sector-specific guidelines and regulations. The provisions of the Act promote transparency and accountability, thus creating a roadmap for more professional conduct.
Once a property broker registers under the Act, he is required to maintain comprehensive records of all the property transactions done by him. The RERA registration number has to be displayed in all the papers and communications circulated in the market, thereby providing public an access to necessary information related to experience, skills and conduct of the broker. The Act mandates all the property brokers to renew their registration after an expiry of a certain term notified by the State.
If a broker does not comply with the provisions of the Act, there are heavy penalties imposed in cases of non-compliance and defaults. Brokers, who do not register under the Act and continue to transact properties, can face penalty of up to Rs 10,000 a day and the amount of total penalty could be as high as 5 percent of the cost of the properties brokered by him. The magnitude of penalties in itself demonstrates the serious outlook adopted by the government towards regulating the sector and ultimately protecting property buyers against unauthorized transactions.
The Act, for that matter, covers all types of real estate. Section 2(e) of RERA Uttar Pradesh, for example, defines ‘building’ that includes both residential as well as commercial property projects.
The strict regulations and penalties enforced by the Act may appear to be negative to property broker fraternity, but in totality that is a blessing in disguise. The Act will ensure that only the serious players sustain in the market. Property broking shops that mushroomed all over the cities just to make quick money out of property dealings will have to either raise their levels of knowledge and professionalism or die out.
There won’t be any room for unethical property brokers who could exploit consumer rights. How it is going to influence the demand side? I think very, very positively! The consumer-oriented provisions of RERA would bridge the trust deficit amongst builder, broker and buyer, widespread in the sector.
The role of property brokers will become much more significant as the clients will be able to place their trust in them. Thanks to initiatives taken by industry associations such as National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI), property brokers could now undergo comprehensive trainings to enhance their skillsets and get certified.
In overall, the RERA would consolidate the entire real estate sector encompassing real estate developers, property brokers and other professionals involved in the business, and lay a stronger foundation for a sustainable growth and development of the sector.