RERA Will Ensure Your Developer Focuses On Project Delivery

Several things have changed for the sector after the Real Estate (Regulation & Development) Act, 2016, came into force. PropGuide speaks to Shubika Bilkha, business head, The Real Estate Management Institute- REMI, to talk about the most important factors that would be of concern to developers in the RERA regime. Bilkha is also a member of the executive board of the Annet Group.

Falling in line

It is now incumbent on developers to align their business practices with the stipulations of the Act. While this is not without accompanying challenges, developers need to work fast to equip themselves and their teams with the requisite tools to understand the impact of the regime, structure their organisations and streamline their operating processes to ensure compliance.

Buyer's benefit: Expect to own a RERA-complaint structure and from a far more disciplined regime of developers.

Keeping delivery promises

One of the key aspects of the project cycle that the law focuses on is delivery. The Act ensures that developers comply with the committed project-delivery timelines. Under the Act, developers have to register their projects with all the details by phases, submit the approved plans and meet the completion timeline of each phase to get payments released from the project account and avoid penalties. Any changes to the structural plan now require consent of two-thirds of buyers.

Further, developers are now responsible for structural defects up to a period of five years from the date of possession.

The Act also makes cash-flow management critical as it limits any collections in advance from buyers (on registered projects), and restricts withdrawals from the project account to the accomplishment of delivery milestones.

Buyer's benefit: Project delays may now be only due to genuine issues.

Management is the key

For developers, meeting these stipulations of the Act requires building enhanced delivery capabilities within their organisations. Project management has now become an essential aspect of the development process. Integration of various departments and teams is now important to ensure compliance. Additionally, with the advent of the goods and services tax, developers are now incentivised to work with organised vendors and suppliers to get the input tax credit.

It is through optimal project management practices that developers will be able to meet their commitments. Project management enables developers to outline the scope of the project, determine the timeline for delivery with the associated cost for effective cash-flow management, ensure optimal management of vendors and quality control in the procurement and construction process. Project management practices also provision to streamline communication across all the relevant teams/departments in line with the requirements of the Act.

For a number of real estate companies, this means increasing the number of project managers within their organisations, and taking a more structured approach towards development. It also means adopting the right project management tools and newer construction technologies to meet the timeline for completion.

Buyer's benefit: The real estate sector is concentrating on becoming more professional and product-oriented so buyers have the benefit of dedicated departments working on the end-product.

Maintaing the cash flow 

Consumers have often struggled as a result of poor cash-flow management on the part of the developer. Consumers now benefit from the increased transparency throughout the delivery process as well as quality assurance on possession.

Buyer's benefit: Money matters have become more transparent than ever, thanks to a developer's need to invest in project management. This may mean slightly higher capital values but the end-product would be worth the wait.