Construction sector as an industry has embedded its roots for an unshakable future in the last two decades!
The industry has been one of the cornerstones for the revolutionary development witnessed in the country.
A projection in the beginning of the year was impressive, stating a rise in Compound annual growth rate (CAGR) up to 13% and the share in the GDP to rise to a whopping 9% was expected by 2021. However, the Lockdown and COVID- 19 impact has halted the growth and a contraction of a minimum of 7.5 % is predicted in the overall construction industry.
The development and expansion in the medical, educational, and corporate sectors have increased the demand for the properties by two-thirds!
An overview of the Pre-RERA stage
In earlier times, buyers have always been on their own when it came to decision-making about purchasing or investing in real estate. Majority of the population in our country would invest their life savings on getting a house of their own, without any quality guarantee from the builders.
Many construction companies have played a prominent role in creating their goodwill in the real-estate sector for more than five decades. These eminent builders have been enjoying their reputation and are known for their quality and commitment.
On the other hand, due to diversification and easy money, the people with absolutely no experience of construction started construction activities.
Resulting in its separate unscrupulous lobby of builders, conceiving a negligent and unfair image of Promoters and builders for reasons like:
1. Delay in delivery of projects,
2. Unfair escalation clauses,
3. Non-conformity with standards of quality raw materials, and
4. lastly, no-redressal for post-sale issues or complaints
Over the years, even after a staggering rise in awareness on the consumer level, the construction sector always fell short on supply to demand for real-estate, due to galloping rise in demand causing the promoters to continue flashing their monopoly card!
Unprecedented growth in demand for housing and commercial spaces was backed by urbanization, migrating workforces, changing corporate culture, need for better office spaces and changing family setups. The absence of specific laws applicable to the builders left the buyers without much of legal recourse to them.
RERA and its effect on the quality of construction
RERA - (Real Estate (Regulation and Development) Act came into force with full entirety 01/05/2017. This highly proclaimed act rolled out to protect the interests of the buyers and ensure transparency in the dealings of the Builders or promoters.
The projecting front of the RERA act has been the quality of the construction and promoter’s responsibility for the timely completion of the same.
Narrating the act's central idea on quality perspective, here are some points summarized for a more explicit understanding:
1. Restriction of funds allocation - As per the laws, the promoter or the builder has to put aside 70% of project funds in an escrow account dedicated to the respective project.
The amount from the escrow can only be withdrawn based on the stage of completion certificate signed by all the three - an Engineer, an architect and a Chartered accountant only.
This point restricts the syphoning of funds, under-utilization of funds for quality compromises.
The builders are motivated to mobilize the capital beneficially, instead of manipulating it in the form of pre-launch offers etc. and eventually jeopardizing the quality of construction.
2. Builders liability - The builder or the promoters are liable for any structural defects or any repair for five years from the date of handing over possession to the buyer.
The builder has to rectify to all such defects and repair them free of cost, without any additional charges from the buyer. Given this rule, the builder would use durable and high-quality materials such as tiles, bathroom fitting, shuttering to avoid, or at least reduce such incidences in future.
The repairs are to be carried out within 30 days. This fact urges the builder to invest in materials, fixtures, fittings and technologies that can be easily repaired or replaced.
The delay is attending to the repairs or defects the builder is also liable to pay compensation along with relevant interest.
3. Timely delivery of the project - As per the requirements of the act, the timely completion of the project is mandatory.
This restriction renders the need to use befitting technologies and methods that are time tested for quality and performances. The latest technologies and construction styles are result and performance-oriented in the long run. These adaptations automatically promote quality assurance practices.
A scenario post RERA reforms:
All the above provisions of the RERA act have brought the builders under a stringent quality-check radar. As any non-compliance has direct penalty on the builder and reciprocating redressal to the allottees.
These reforms have set the cycle in motion for the allied and supplier industries for the construction sector. The demand for quality products, labor, services by the builders will impact the overall supply-chain in the real estate sector.
It will engage the contractors and service providers in better business practices that are quality-oriented.
The customers are not blindfolded by pricing offers and concessions offered by the builders. Quality of construction, timely project delivery supersedes all other points, which are ensured by reputed builders. The buyers feel respite by the simplified laws and unaltered flow of information about the status of the development on the website of the RERA authority.
Knest Aluform has always stood by the promise to deliver quality products with timely delivery. The RERA reforms are in line with the pre-established aim and motto of the company, to serve the latest with high-performance deliverables! We look forward to adapting the best practices of the industries and support new reforms.
Addressing the concerns of quality and introducing direct responsibilities of the promoters towards the buyers, RERA has streamlined the equation between both the parties. With transparency, the industry will rise as an honest and customer-oriented image.