Unraveling the pre-launch real estate conundrum in India
In recent times, the real estate market in India has witnessed a resurgence in pre-launch activities that should give any potential investor pause for thought. These practices have raised significant concerns about their legality, transparency, and the risks they pose to unsuspecting investors.
In this article, we shed light on some of the dubious practices and delve into how the Real Estate Regulation and Development (RERA) Act is designed to safeguard investors.
Opaque Deals: One of the most alarming trends is the practice of soliciting non-bankable cheques without providing essential details about the project, such as rates, size, area, total land, number of floors, FAR (Floor Area Ratio), location, and specifications. This lack of transparency makes it difficult for investors to make informed decisions.
Priority Numbers for Cheques: Some developers claim to allot priority numbers to those who provide advance cheques, creating an atmosphere of urgency and FOMO (Fear of Missing Out) among investors.
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Return on Investment Promises: Promises of attractive returns on investment, often spanning multiple installments, raise questions about the financial viability of these projects and whether they are sustainable or part of a Ponzi scheme.
Unapproved Projects: It is also disconcerting that some developers are marketing projects that have not yet received regulatory approval. This practice not only violates RERA guidelines but also puts investors at significant risk.
The Real Estate Regulation and Development (RERA) Act, enacted in 2016, was a game-changer for the Indian real estate sector. Here’s how it aims to protect investors:
Security: RERA
