mumbai real estate – The Metrognome

Use RERA to your advantage when buying a Mumbai home

The RERA is a veritable boon in the hands of flat buyers in Mumbai. We explain how it helps bring greater transparency in the flat-buying process.

The real estate sector in India has been seeing some curious trends in recent years. On the one hand, there is a constant refrain from buyers that realty is too expensive to invest in at the moment. On the other hand, the luxury housing sector continues to show stable growth! Amidst talks of a slowdown in Indian realty year upon year, came the ambitious RERA (Real Estate Regulation and development Act) that was promulgated all over the country in 2017.

The RERA was created to bring in greater transparency in the house purchase process for buyers. Using RERA helps buyers become privy to all the important information they must necessarily know – flat and real estate developer credentials, project timelines, construction progress, reasons for delay, etc. The RERA is aimed at helping buyers make well-informed decisions about buying Mumbai properties and investing in the right projects.

Are you a first time homebuyer looking to invest in an under-construction property? Here’s a lowdown on how RERA can help you pick the right flat for sale in Mumbai:

* RERA assures you that everything is laid out in black and white. The primary thrust of the RERA is complete transparency, which means that buyers must be privy to all the information they seek whenever they seek it. The Act has been worded to include every facet of the process, from initial construction to final handover of the completed Mumbai property. It also specifies the legal and construction standards that developers must uphold per project, starting with taking a RERA project number that must be clearly mentioned across advertisements, brochures, project plans, etc. This number helps buyers keep online and offline track of the project’s progress. Prior to starting the construction, the developer must give written specifications, include copies of municipal approval, land title and reservation, project timelines, etc. and adhere to the same or furnish written reasons for delays.

* New constructions are more professionally handled from now on. Since RERA specifies stiff legal penalties for inordinate and unexplained delays, developers are now more cautious about using their available funds and giving completion timelines. Smaller players in realty were earlier quite glib about several parameters, which led to delays, stoppages and huge losses for buyers. But the RERA weeds out the unscrupulous developers from the professional ones. Since real estate developers must specify problems and delays in writing, there is no scope for buyers to be left high and dry with stalled projects, or builders abruptly stopping their rent payments (in case of redevelopment projects), etc. Thus, developers are now more accountable for their projects, leading to faster completion.

* Projects are now securing funding much faster. Buyers are now confident about investing in 1 BHK flats in Mumbai, or luxury 2 BHK flats in Mumbai, since every new project must be licensed and approved by RERA. In turn, an approved project automatically increases its own chances of getting home loan funding. This is good news for those buyers who wish to secure home loans for buying flats for sale in Mumbai. Meanwhile, real estate developers are also able to secure funding to start and finish the construction when there is RERA certification for the project.

(Featured image courtesy https://blog.ipleaders.in/stalled-projects-rera/)

Who is buying flats in Mumbai?

Despite developers’ many claims of ‘sold out’ projects, Mumbai’s real estate market is still in a continuing state of stagnancy.

by Reyna Mathur

Any major newspaper in Mumbai these days normally carries a full front page advertisement for yet another ‘dream housing project’ in the city limits or on its outskirts. Big or small, most real estate developers are advertising for their upcoming projects like no tomorrow, spawning theories that the city’s real estate sector is finally out of trouble.

However, experts are divided on the issue, and on-ground realities say otherwise. Despite aggressive advertising and appearances at property fairs, developers are finding it difficult to sell already built housing units, or get customer interest in new proposed projects. Each year, property prices are continuing to rise, making it virtually impossible for first-time buyers to even consider purchasing a property without the burden of large home loans.

Add to this the fact that several pockets of Mumbai – which were earlier considered a solid investment – are now simply saturated, having hit the boundary for growth. People then started considering the northern suburbs beyond Borivali, but with an overall slowdown in the industry, even these houses are not yielding the kind of returns they normally would.

A departure from earlier investment patterns

A common-sense approach to investing in houses is to select a site that promises future growth, and hence a doubling of the initial investment. Another way is to invest in under-construction houses so that payment instalments are easier on the buyer. However, cases of developers abandoning projects mid-way in the recent past have scared off potential buyers.

Another problem plaguing the real estate sector in Mumbai is the lack of implementation of planning and building norms. These cause huge hassles at a later stage, when builders seek OCs (Occupation Certificates) and CCs (Completion Certificates) which the BMC does not furnish on finding that several norms have been flouted in the construction process.

A lean period like never before

The first signs of a crash in the city’s real estate market came with the worldwide economic recession of 2008-2009, when prices crashed dramatically. However, a year later, the sector consolidated and made good on its losses, but elsewhere, inflation and rising prices made buyers and investors think twice before taking the plunge. Interest rates on home loans also started climbing post 2010, and have continued to climb since.

All of this resulted in a curious ‘more supply, less demand’ scenario for housing in Mumbai. What was expected to be a ‘drought’ period of about three years has now extended to seven years.

Even the big developers are hit

Only major names in the real estate space in Mumbai, and indeed the country, are doing somewhat good business currently. With their strong market presence, they are able to not just generate more projects but complete the ones in hand. Yet, experts say that it is becoming a tough task even for these moneyed developers to sign up for new townships – there are no huge tracts of land now available in Mumbai, and the lands that are available are caught in a maze of reservations, permissions and modified Government policies.

The major projects currently underway in Mumbai, however, seem to cater only to the wealthiest sections of society, with each square foot of built space being sold upwards of Rs 50,000 or more (depending on the area of Mumbai).

The most badly hit are the middle-level developers, who mainly rely on small redevelopment projects or single-tower projects for business, and which are currently not forthcoming. With them are hit the middle classes, who are actually in need of housing but are forced to either move out of Mumbai or spend money every year on rental accommodation – even as their eternal quest for a house in Mumbai continues!