Owning a home in Mumbai is a dream for many. Thus, when Rahul was considering buying his own home, it was a dream come true moment. When he started with the research for his home, he came across the newly formed The Real Estate (Regulation and Development) Act, 2016 (RERA). Upon further research, he found that RERA has been implemented in Maharashtra already by Maharashtra Real Estate Regulatory Authority. He decided to postpone the home purchase as he expected the real estate prices to fall in coming months.
Was Rahul’s decision to delay buying a home right? Let’s find out
The inspiration for RERA
RERA was introduced on May 1, 2016. Its aim is to bring transparency and fair practices that would protect the buyer’s interests and impose penalties on errant builders. In 2017, many states enforced rules based on the guidelines laid down by the Act.
Here is a look at the minor nuances of the Act and its influence on property rates.
How RERA helps buyers?
RERA is a customer-centric Act that simplifies real estate investments and makes them fraud-free and affordable. Here are a few provisions that RERA has for home buyers:
- Home builders or promoters are required to register themselves on RERA’s website and furnish the complete details of the projects they are developing. A home-buyer can find all the details online for their interested project. Thus, RERA makes the home buying transparent and unambiguous.
- Builders are required to complete their projects within the stipulated deadline or pay penalties. This would ensure that the projects are completed without delay. Alternatively, any delays will be properly compensated.
- The construction materials used need to be of a standard quality. If not, the builder would be held responsible for any defects.
- If a builder or developer doesn’t adhere to RERA guidelines, they would be heavily penalized. Thus, RERA ensures that the rules are followed.
Implementation of RERA in Maharashtra
Though the RERA Act has been passed in the Parliament, not all states have implemented them yet. Only 13 states have implemented RERA and Maharashtra is one of these states. It came into effect from 1st May, 2017.
Current Real Estate Prices in Mumbai
Mumbai is the largest metropolitan and the second most populated city in the country. However, real estate prices in Mumbai are exorbitant. In fact, an average 1 BHK in Mumbai costs Rs. 60 lakh to Rs.70 lakh. At such a price, you can easily get a 2 BHK in other cities. However, demonetization and the implementation of RERA have reduced real estate prices to some extent. There is a reduction of almost 40% in real estate prices in Mumbai due to RERA.
The pre-demonetization and pre-RERA average cost per square meter in Mumbai was between Rs.1 lakh and Rs.1.25 lakh. Post demonetization and RERA implementation, the costs have come down to Rs. 65,250 to Rs. 96,000 per square meter.
Thus, RERA has ushered in a positive change in the real estate sector not only in terms of fairness and transparency but also in terms of price.
The expected future
Mumbai’s real estate is expensive even after a price cut. If you think, like Rahul did, that the real estate prices are expected to drop further, you could be in for a surprise. Price correction due to demonetization and RERA implementation has been completed. Most of the real estate developers have registered themselves with RERA and are advertising their projects and the respective prices online. According to the experts, further rate cuts shouldn’t be expected. You can expect the rates to remain the same. Thus, postponing the decision to buy a home in the hopes of a further price cut could be futile. If you are planning to buy a home, this is a good time. You can get all the information online and expect complete transparency when dealing with developers registered with RERA.
A good time to avail a home loan?
Furthermore, the interest rates on home loans have also been slashed by leading home loan providers. For instance, HDFC Limited, India’s largest home loan provider, reduced interest rates on its home loan by 15 basis points for new borrowers. The new interest rates became as low as 8.35% for female borrowers and 8.40% for male borrowers. Similarly, ICICI Bank also reduced its home loan interest rates by 30 basis points and brought it down to 8.35% for salaried female borrowers and 8.40% for others. SBI, India’s leading bank, followed suit and reduced the interest rates to 8.35% for female borrowers under its home loan scheme called Griha Siddhi. Therefore, if owning your house is financially constraining, you can avail a home loan at these new and affordable interest rates.
Rahul postponed his decision of buying the house. However, he soon realized that it was a bad decision. If you too are delaying purchasing a home in Mumbai, don’t. Buy your home today at reduced rates.
From searching a home and availing a Loan, Bajaj Finserv Homes & Loans has a unique proposition.
Also Read: Diluted RERA makes Haryana Buyers anxious