_India: Impact of RERA on Brokers
Broadly RERA across states, including the new RERA rules passed by Maharashtra, and even the central Act, lay down the ground rules in which developers and homebuyers would interact in future. The manner in which these two most important stakeholders would interact once RERA comes into force has been much talked about and discussed but the manner in which RERA will alter the way real estate agents function has not garnered much attention.
Like real developers and homebuyers, real estate agents too are an important and integral part of the real estate sector. They provide the important link between the real estate developer and the homebuyer. While there have instances of real estate developers directly marketing their products to the homebuyer but even today most housing projects, in the primary market, are marketed by real estate agents. It would not be wrong to say that they provide the last mile connectivity to the developer as well as the homebuyer. Even in the country’s largest real estate market—Mumbai—real estate agents from the unorganized sector provide that most important link. So how will the new RERA rules for Maharashtra alter the manner in which real estate agents operate in the sector?
The real estate agent till now
While the real estate agent provided the last mile connectivity to both the developer and the homebuyer, there are hardly any entry barriers to become a real estate agent. There are professional real estate agents that operate in the sector but a major part of the market is still dominated by real estate agents who are hardly trained to act in a professional manner. Thus this section of the sector smacks of unprofessionalism which to some extent leads to bad blood between the developers and the homebuyer. This is a fact even in Mumbai, the largest real estate market in country. In the present day real estate agents merely act as a facilitator between the buyer and a seller and refrain from providing a more advisory and consulting role. The new RERA rules for Maharashtra clearly lay down the ground rules within which real estate agents will now have to operate. In order to do this they will now have to function in a much more professional manner failing which they will be debarred from the sector.
The way ahead
The new rules of the game for Maharashtra create filters that will ensure only serious real estate agents operate in the sector. This is largely in line with the central Act and RERA rules of other states like Delhi and Karnataka. As per the new rules for Maharashtra no real estate agent shall operate within the sector without obtaining registration from the relevant authority. The developer too when providing disclosures to get his project registered, with the relevant Authority, has to provide names of real estate that will be employed to market to project. To market the project, the developer can only enlist the services of a registered real estate agent. With this single stroke real estate agents with dubious credentials will be weeded out of the real estate sector in Maharashtra and more importantly from Mumbai.
In order to get himself registered the real estate agent needs to provide a whole host of disclosures to the authority. These documents would attest his identity, his professional experience and track record in the sector. Once all the papers are in place and the Authority is convinced of about the genuineness of the papers, it will provide a registration number to the real agent. This number needs to be quoted in all dealings that the agent will be involved in future. While rules for other states are silent on the time frame within which registration will be provided after the receipt of application the new rules for Maharashtra clearly specify the timeframe. As per the new rules for Maharashtra after receipt of application, if the Authority is satisfied with the papers, registration will be provided within 30 days. The registration so granted will be valid for five years. The new RERA rules for Maharashtra have also brought down the fee that real estate agents were required to submit along with the application fee to get registered with the authority. Earlier the real estate agent was required to pay Rs. 10,000 in case the applicant was an individual; Rs. 1 lakh if the company was not registered under the Companies Act, 2013 and Rs. 25 lakh if the company was a corporate body registered under the Companies Act, 2013. Under the new rules the real estate agent needs to pay Rs. 10,000 if he is an individual and Rs. 1 lakh in other cases.
As already stated the registration so granted, according to new rules for Maharashtra, will be valid for five years. Before the expiry of registration, the real estate agent needs to apply again to the Authority to get himself registered. In case of Maharashtra, the real estate needs to apply for registration 60 days prior to expiry of registration. The rules also clearly state the functions of a registered real estate agent.
Thus the new RERA rules for Maharashtra will not only cleanse the sector, it will bring about the much needed professionalism that the sector badly needs. It will force real estate agents to adopt a more constructive, advisory and a professional approach. By ensuring that only professional real estate agents function in the sector the much talked unprofessionalism (among real estate agents) will be a thing of the past.