The new Real Estate Act, which came into force on May 1, is set to increase the price of real estate even further.
PANAJI
The new legislation has a number of regulations for builders to follow, as a result of which they will be incurring more cost, which they say will have to be passed on to the buyer.
Kumar Gera, chairman, Gera Developers, said, “The price increase in the real estate sector will be significant, but at the same time the quality of product for the buyer will also improve.
For example, builders now have to put 70 per cent of the amount received from allottees in a separate account. Due to this, they will have to borrow money from banks, which will push up the interest”.
As per the new Act, the builders can withdraw money from the separate account to cover the cost of the project in proportion to the percentage of completion of the project. But, such withdrawal can be made only when it is certified by an engineer, an architect and a chartered account.
This will not only make the withdrawal process complicated but also time consuming. Time lapses will require builders to borrow money from the bank for short-term. The Act also has a provision under which builders will have to repair any structural defect arising in the building within five years from date of handing over possession.
This will definitely improve the quality of projects, but in turn will also increase the cost.
