By Accommodation Times Bureau
A large number of property brokers in the country may shut down while bigger brokerages would be forced to build up under Real Estate (Regulation and Development) Act 2016 (RERA).According to property advisers and brokers’ associations,the new realty law aims to bring transparency and accountability to the real estate market.
In accordance with the real estate agent body National Association of Realtors-India (NRA), around 75% of the total brokers may close down business in the next three years as regulatory reform sweeps over the real estate market. In the same way, the Confederation of Real Estate Brokers Association of India (CREBAI) also anticipated that almost 50% of local property agents may not exist as the sector is becoming more competitive and compliances evolve.
According to estimates by real estate brokerage firm RE/MAX India, around two million real estate agents currently operate across India, Sam Chopra, president, NRA-India said, “The new system will sieve out non-serious players (brokers). It will go down to just about half a million by 2020. There will also be a series of consolidation among brokerage firms. You have to either step up or step out because the market is becoming competitive.”
The Real Estate (Regulation and Development) Act 2016 (RERA), which came into force on 1 May, all property brokers, must register with regulators in their states.They will have to pay a fine of up to 5% of the total property cost in case of any misinformation about the projects they sell or in case of default by developers they represent.
AnujPuri, former chairman and country head of property consultant JLL India, who recently bought out the company’s residential business to start its own brokerage firm said,“Only serious brokers would register as there is a fee that needs to be paid. Secondly, maximum consolidation would happen once they discover that this is an onerous, responsible profession now.”
PrakkashRohira, a Mumbai-based real estate broker said,“It has been tough for brokers to sustain themselves for the past two years because of the slowdown. Now, with RERA coming in, it will become more difficult because of the penal factor. Besides, RERA does not have any answer to problems faced by brokers. There is a good chance many people will exit the industry.”
Vikram Mehta, president of CREBAI, agreed that while brokers have not been left out of the attention of RERA, the government has “not taken care to safeguard their interest”. He said strict provisions under RERA may force around 50% of brokers to shut their real estate broking business.
AvinashMordani, a real estate agent said,“Faith in builders has decreased considerably in the past one-two years. Now, with RERA coming in, brokers will also be responsible for failure of not delivering on time. Why will I want to stick my neck out when we will be penalized for mischief of builders.”
Housing Development Finance Corp. Ltd (HDFC) is in talks with online classifieds firm Quikr India Pvt. Ltd to sell its brokerage business HDFC Realty and digital business HDFC Red in an-all stock deal.
Chief executive officer of HDFC Realty LtdVikramGoel, declined to comment on the deal but said the brokers’ community is headed for a major coalition as they explore ways to work together. Recently, the firm also adopted a partnership model where it is looking to collaborate with local brokers to sell properties as part of its expansion plan. So far, around 7,000 real estate agents have registered. It plans to take it to 15,000 by year end. He said, “We started this drive in anticipation that local brokers would want to align with someone who would educate and train them post the implementation of RERA. We have received a massive response so far.”
Simultaneously,PropTiger is planning to cut down the number of developers it works with to about 75-100 from around 500 as part of its larger effort to stay compliant with new regulations. “We want to reduce the footprint. We want to be more meaningful to fewer developers who are compliant with new laws,” said Sunil Mishra, chief business officer, PropTiger.