Understanding RERA

How Has RERA Helped Home Buyers and Property Investors In 2018?

RERA as an Act has been beneficial to buyers but this meant complete transparency from the developer’s end which brought out all the hidden rodents to the surface for clear transactions. RERA is the RTI (Right to information) in the Real Estate world, but our question here is, was it necessary? If yes, then did home buyers benefit from the Act?

Many home buyers believed that the real estate transactions were heavily skewed in favor of brokers, developers, and other middlemen. The Act was set in place to protect home buyers from fraudulent activities like money laundering and to mainly establish a more streamlined process for the Realty sector. The whole purpose of the act is to basically make every real estate transaction safer by inculcating more transparency and accountability.

Ashutosh Limaye, head of research at consultancy JLL India, says while so-called ‘fly-by-night’ developers have been exiting since RERA was implemented, it would be unfair to think that all small players are unscrupulous. “It has nothing to do with the size or scale at which developers operate, it is about their intent. Several small players have made themselves RERA-compliant, because they want to be in this space for the long term,” Limaye says.

RERA’s Benefits to home buyers

Carpet Area Standardisation

The Act introduced a carpet area formula for an even calculation. The carpet area is therefore defined as ‘The net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

This standardization has kept the builders away from inflating the carpet area price which works perfectly in favour of the buyer.

Rate of Interest for Defaulters

The Act has brought both the buyer and seller parties on a common platform by maintaining an equal rate of interest for defaulters. Before the act, the interest paid by the builder to the home buyer was less but if the buyer defaulted, the interest was higher, and this was an unfair deal that discouraged home buyers.

No More False Promises

The buyer has every right according to the act to withdraw from the project with a full refund if the builder fails to deliver any commitments. This increased the faith of home buyers back in the whole Real Estate system and we shall give you the proof to it further.

Advance Payments

The builder can’t take more than 10% of the cost of the apartment, villa, etc. or any other application fee before entering into an agreement of sale. This works in the buyer’s favour yet again!

In case of defects

Any infrastructural defect in quality, workmanship, provision or service if discovered within the first 5 years is entitled to rectification by the builder at no extra cost within 30 days and buyers can also claim compensation for the same.

Delay in Possession

The buyer has all the rights to withdraw from the project with a full refund, along with interest payable from the due date of completion until the amount is refunded. If the buyer decides to continue with the project, till the completion, he will be entitled to compensation along with interest payable from the due date of completion of the project until the project gets completed. This ensures proactive commitments and a fair process that is beneficial for both the buyer and the builder.

A Title Compensation

A defect in the title of the property can also result in compensation which is not barred by any limitation and this means there isn’t any time limit within which you need to discover the defect.

Right To All Information

The buyer is entitled to all the information related to the project in terms of the plan, layout, execution, completion status, facilities, etc. What more could a buyer ask for?

Grievance Redressal

In case the builder fails to comply with the terms of this act, the buyer can take it to the state authority set up under the act, which has the power to redress the grievances.

A MahaRERA official said, “If a homebuyer or a developer is not satisfied with the RERA order, he/she can make an appeal to the appellate board instead of approaching the high court.” 

Did Housing Purchases Increase Post RERA?

Housing sales in the top seven cities grew by 12% in the first quarter of 2018 which indicated that the act restored the faith of serious home buyers, attracted by the new environment of transparency, accountability and financial discipline back in the Real Estate sector – Anarock Property Consultants.

Around 49, 000 units were sold in the quarter, with NCR, MMR, Bengaluru, and Pune alone accounting for 80% of the sales, while the only state that experienced a 12% drop was Chennai.

Homebuyers are now encouraged to make their first home purchase because of the security provided by the state. There couldn’t be a riper season than now, to take advantage of the schemes implemented by the government and an array of firms that are trying to close the massive gaps between the desire of owning a house to turning those dreams into reality.

If you are a new home buyer, we’re happy to let you know that you can now own your dream house without even worrying about the total down payment, because HomeCapital takes care of that!

5 Financial Investment Decisions You Should Take in Your 20s

A financial investment sounds like an adult step in your life, now that you’ve reached a certain stage of stable income. Millennials all over the world find it hard to save, while in India, we find it hard to spend. You’re probably familiar with the words ‘Saving at an early age is good for your finances beta’, because the habit of saving and investments have been deeply ingrained into our culture.

The question however, that arises here is, ‘Where do I invest these savings?’ While you begin thinking about your financial investment decisions, make sure you don’t invest all your eggs in one basket. They need to be spread out across baskets made of iron, cane, gold and even cement for optimal return on investments.

Charting a financial investment plan is easy but sticking to it is where the game changes. This is where you account for every penny that you spend, so that its on the right track towards giving you a prosperous future.

Equity / Stocks

Stocks aren’t for the risk takers we agree, but what if we asked you to skip spending on a T-shirt that costs Rs 300 (with no returns) and invest in a stock worth that amount? When you watch that stock double in a few months, you’ll thank us! You can take baby steps with SIPs and Mutual funds for starters and then take the big risky moves once you’re confident enough.

Before you make your financial investment in the stock market, you must know that you won’t see your money double instantly. The path to long-term wealth creation is building a diversified portfolio of stocks, bonds and a variety of other assets.

Bonds

Bonds or fixed income investments are basically loans from an investor to a company or government. Bond investors receive periodic payments based on the interest rate at which the bond is sold. A bond is usually tied to a coupon or interest rate that is known at the time of buying and this is where you identify your profit in the long run.

All bonds offered to the public have to be listed on a stock exchange and you can sell them on the stock markets if you need funds before maturity. You make a long-term capital gain (LTCG) if you hold the bonds for at least one year before sale and you also score the benefits of indexation while calculating the LTCG tax!

Fixed Deposits & Recurring Deposits

One of the safest financial investment strategies would include multiple fixed deposits od FDs with different tenures. Fixed deposits are a form of investment where you invest a fixed amount of money for a period at a predetermined interest rate. Your money here is safe and returns are guaranteed with high interest rates, but the only drawback is the inability to withdraw this money before its maturity as compared to other investment instruments.

Recurring deposits on the other hand serve your short-term investment goals where you invest a certain amount of money for a fixed tenure. Interest rates for this kind of a deposit are predetermined and based on the amount and tenure, but the catch here is that you cannot change the monthly deposit amount, nor can you withdraw any part of the investment until the tenure is over.

Gold

Gold is one of the best financial investment tools that will always come in handy. As Indians we cherish the idea of stocking gold because we already know its financial value in times of emergencies. You can buy physical gold in the form of jewellery, coins, gold bars and also own paper gold by using gold exchange traded funds and sovereign gold bonds. There are also gold mutual fund options today that gives you added flexibility towards owning the asset. So the next time you receive gold as a present, preserve it in your locker.

Real Estate / A House

Real Estate is the only commodity in the world that will never depreciate in terms of its value. Investing in a house will give you returns in the from of appreciation (Increase in the housing value) and rent.

In 2017, the rental real estate market was pegged at one crore units and was valued at $22 billion (Rs 1.53 lakh crore). By 2023 its volume is expected to reach 1.8 crore with a valuation of $41 billion (Rs 2.85 lakh crore). Make sure you invest in a locality that is upcoming or in high demand to reap maximum benefits.

While you think about this decision, you’ll have one aching question ‘But What About Down Payment?’ Let our home down payment program take care of that!

An example

With that being said, we’ve come up with a hypothetical situation to give you an idea about your financial investment roadmap:

Name: Rahul Kapoor
Age: 26
Salary: Rs 40,000 PM
Savings: Rs 1,20,000
Wishes to buy a home in 5-6 years

Rahul should begin by investing 50 percent of his income in Mutual Funds. He must ideally invest Rs 12,500 in ELSS funds and Rs 7,500 in non-ELSS funds for five years via SIP, so that he gets a good base amount to purchase his new property. He can invest his savings in Corporate Fixed Deposit with yearly cumulative interest.

SIP investment – Rs 20,000/month
Expected rate of interest – 14 percent
Investment duration – 5 years

Post 5 years, the invested Rs 12 lakhs along with SIP investment’s future value will give him a total of Rs 17.24 lakhs. He now has close to Rs 18.5 lakhs as down payment which can be utilised if the home, he is buying is under Rs 80 lakhs.

Using his own savings, a bit of a contribution from HomeCapital and a home loan on his current salary, Rahul can now own a home in 5 years.