Real Estate (Regulation and Development) Act (RERA) aimed at offering protection to home buyers, is expected to have a negative impact on home price.
"There will be a rise in the price of homes due to higher compliance and finance cost for the builders after RERA is in force. Initially, we expect 10 per cent jump in construction cost for builders, in turn, that will get passed on to the buyers," Real estate body Credai Bengal president Nandu Belani told PTI.
He was speaking on the sidelines of an interactive session on RERA in association with BCCI and MACJ-A Buyers Choice Home Inspection.
RERA, likely to come into force from May 1, mandates builders to keep 70 per cent of the collection from sales proceeds in an escrow account leaving less flexibility for builders to utilise the proceeds in different projects.
Builders say the need for capital would go up due to RERA provisions.
However, builders welcomed RERA saying it will eliminate fly by night operators and induce credibility.
A major concern bothering the realtors is about the existing projects and they have sought some respite on the applicability of RERA at least for the projects at different levels of completion.
Emami Infrastructure Ltd director and CEO Girja Choudhary said "We are concerned about the RERA applicability on ongoing projects. It would be good if states adopt what Uttar Pradesh government has notified about some exemptions about the ongoing projects."
Belani said in the transition period new home project launches will definitely get reduced.
Meanwhile, home inspectors or independent auditors are catching up with both builders and home buyers.
One of such home inspection company, MACJ- A Buyer's Choice Home Inspections director and CEO Mahendra Sureka hoped that in the next two years home inspectors will also be part of the regulatory framework.