As we are aware of the new real estate regulation act in India after demonetization that changed the market, by making it crystal clear and competitive. RERA is bringing more professionalism in Real estate and encouraging builders to take more risk. The regulation act (RERA) only covers guidelines/norms related to Sales, purchase and construction/development of properties/projects. It skipped one of the most important needs of the market. i.e. strong Leasing/Rental laws.
Earlier, the super area was considered in calculating the cost of selling units but after RERA, the market value of the residential unit (flat or apartment) will be calculated as per sq. ft. according to its carpet area excluding the balconies. In leasing/renting the rent is calculated as per sq. ft. super area but in fair sense it can be calculated as per sq. ft. carpet area.
The leasing/rental process in India is more flexible in comparison to other countries. The Indian rent control act differs from state to state making it less informative and more complex. Unfair Tenancy eviction is one the major problems the market is facing today. The landlord is more dominant even after the agreement among both the parties. More often a tenant is evicted without any solid reason and the tenant right is violated. The second problem is that most of the people are not aware of the rental laws of their state. Even after having such laws, the tenant suffers. The mutual renting culture is creating more confusion among the parties and there arises a difference between the laws and mutual decisions. The applicable 10 % rate of rent increase (residential property) every two years in India is also one of the major problems which is creating instability for a tenant and more expectation for the landlord. There can be a provision for the mutual rent increase instead of the fixed increase rate. RERA has the power to implement strict rental laws under its banner.
By Shivam Sadana, Managing Director, Sadana properties
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