Rera legislation in India a leveller of playing field
Aaron Solomon, a partner at Solomon & Co, a law firm in Mumbai, talks about the implications of Rera in India for UAE developers.
What might Rera mean for UAE investors in developing residential properties in India?
UAE investors acting as developers in real estate projects in India can be assured of a level playing field and adoption of internationally adopted practices for real estate development in India. They could be assured of greater certainty, heightened transparency and clear regulatory norms. The act provides clarity to investors and developers in terms of their returns, risks and cash flows.
What other effects could the new law have?
Rera will bring transparency in the development of a real estate project, including timely completion of the project, reduce frauds and introduce professionalism. Rera also contemplates the issuance of title insurance to reduce the risk of title disputes affecting the Indian real estate project. On the other hand, the Indian real estate project would be highly regulated. Violation of provisions of Rera may attract a penalty up to 10 per cent of the estimated project costs and on continued violation, the promoter – including the UAE investor acting as a developer – may be further penalised, including imprisonment.
Will Rera mean higher costs for developing residential projects in India?
The cost of developing residential projects in India would increase because of the compliances, which the developer has to observe under the rules and regulations of the act. The revised development control regulations, which are expected later this year, are likely to increase the developable potential of Indian real estate, and since the size of construction will be higher, developers are likely to be compensated for the additional costs towards compliance.
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