HAS RERA MADE A DIFFERENCE
The Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect from May 1, 2017 and is set to complete seven years of its existence. Let’s take a look at how far we have come from being a unorganized to a regulated sector, beginning with some marquee announcements just this year. Making headlines was West Bengal RERA mandat- ing clear display of registration details in real estate advertisements and promotional materials. The UttarPradesh RERA has directed all developers to ensure sale of apartments is done as per carpet area only. UP RERA has also implemented a new regulation that requires promoters to ensure consistent naming across all official documents and marketing materials for their projects and has issued an order directing the promoters to ensure that they have legal title over the land on which they are applying for registration of the project. Tamil Nadu RERA has decreed that when a realtor promotes a township with multiple high-rise residential towers, the entire township must be registered as a single project under the RERA. Reflecting on the importance of this governing body, the Punjab and Haryana high court had stayed the Punjab govt’s decision to take over the Real Estate Regulation Authority (Rera). In another instance, the court upheld Maharashtra RERA Appellate Tribunal decision to make co-promoters jointly liable towards homebuyers under RERA. Taking cognize of the fact that customers can be wrong too, the Rajasthan RERA rejected the homebuyer's complaint for basement parking facility, holding that it was never part of the approved construction plan. Karnataka RERA rejected the homebuyer’s complaint of restraining the builder from constructing on the area reserved for common amenities, emphasizing that de- spite differences between conceptual and sanctioned plans, the completion and delivery of apartment units remained unaffected. In the case of non-payment by homebuyers, Maharashtra RERA in Pune directed that the agreement for sale of four homebuyers be terminated over non-pay- ment of balance amount. Likewise, Telangana RERA ordered the homebuyer to pay the remaining amount with interest to the builder for failing to adhere to the payment schedule. Also commendable are the actions taken by RERA to protect the developer’s interests such as Delhi Real Estate Appellate Tribunal setting aside the order and penalty imposed by the Delhi RERA holding that while exercising its authority against a promoter or any real estate agent through suo-motu proceedings, must inform the concerned party of the alleged violations by providing specific details in the notice. The ministry of finance too has directed all public sector banks to ensure compliance with provisions of the Real Estate (Regulation and Development) Act, 2016, while allowing developers to withdraw funds from Rera accounts. THE REALITY CHECK These are just some of the most recent rulings of RERA across the country that does indicate the prevail- ing atmosphere of compliance in the realty sector but, scratch the surface and not all seems so good.Homebuyers have flagged how RERA are indiscrim- inately sanctioning extension of deadlines for housing projects and registering them, without carefully verifying the details. Another case in point is of a senior citizen in Mumbai being denied possession of flat as the developer has taken refuge under the insolvency law. Developers have also complained about some RERA authorities that are enforcing certain things arbitrarily.Making things sorrier is the lack of teeth to RERA as it has no enforcement machinery or any control over the local bodies which approve the building plans and give other clearances and even the financial institutions for extending project finances. THE PROGRESS REPORT The progress of RERA in India is nothing but patchy with 32 States/UTs having a functional RERA, Ladakh, Meghalaya, Nagaland, and Sikkim are yet to establish theirs. The Real Estate Appellate Tribunals have been set up in 28 States/UTs, with Arunachal Pradesh, Jammu and Kashmir, Ladakh, Meghalaya, Mizoram, Nagaland, West Bengal, and Sikkim in progress. In terms of addressing consumer complaints, as of end of 2023 RERA have resolved 1,16,300 cases, according to data from the Ministry of Housing and Urban Affairs. UP led with 38 per cent cases, followed by Haryana with 18 per cent, Maharashtra 13 per cent. These 3 states jointly accounting for 69 per cent of resolved cases nationwide. CROUCHING TIGER HIDDEN DRAGON RERA has undoubtedly led to accountability and financial discipline in the real estate eco-system, evi- denced by the rise in capital flows in the sector, easier home loan availability for RERA registered projects and increased sales realizing improved cash flow for devel- opers and reduced dependence on institutional finding. While cracking the whip has to some extent regulat- ed the real estate sector, some major gaps remain that remind of the good old Chinese idiom 'Crouching Tiger Hidden Dragon', in other words, ‘people with special hidden talents’ or in the case of RERA, an institution of high potential benefits. While the performance of RERA cannot be de- nied, the sluggish pace of case resolution and im- plementation of relief measure leaves much to be desired. There have been several occasions cited where compensation granted by RERA never got executed or has been inordinately delayed, leaving the homebuyers in a limbo. In one such case, the high Court taking cognizance of the seniority of the homebuyers and the long-delayed execution application, had directed RERA to expedi- tiously decide the same within 6 months. This exemplifies the need for RERA setting strict time-limit for hearing and decision of execution applica- tions, so that developers cannot take undue advantage of severe delays in execution proceedings. Another major issue that RERA fails to address, and that can potentially benefit the homebuyers the most is the delays on part of the government authorities vested with the power to approve plans and sanction building permits. On an average 40-50 clearances are required for a project. In states which have two regulatory authorities, process becomes even more cumbersome. With no single-window approval mechanism in sight, the daunting task of acquiring approvals from various agencies many a times sets back the delivery timeline, making developer guilty of failing to deliver the projects within the set deadline and leaving the homebuyer in lurch. MAKING THINGS SORRIER IS THE LACK OF TEETH TO RERA AS IT HAS NO ENFORCEMENT MACHINERY OR ANY CONTROL OVER THE LOCAL BODIES WHICH APPROVE THE BUILDING PLANS AND GIVE OTHER CLEARANCES AND EVEN THE FINANCIAL INSTITUTIONS FOR EXTENDING PROJECT FINANCES. SETTING STRAIGHT THE AMBIGUITY AROUND THE DEFINITION OF AN ONGOING PROJECT AMONG RERA OFFICIALS, BRINGING DIFFERENT REGULATORY BODIES AND MUNICIPALITIES UNDER THE AMBIT OF RERA, IMPOSING STATUTORY TIME LIMITS ON THE EXECUTION OF APPLICATION AND GIVING MORE POWER TO RERA ON THE ENFORCEMENTS OF ITS JUDGEMENTS WILL ENSU E THAT IT IS NOT JUST A PAPER TIGER. THERE ARE NO DOUBTS, RERA AUTHORITIES HAVE AWARDED SUBSTANTIAL AMOUNTS OF COMPENSATION TO HOMEBUYERS, TAKEN STEPS TO ADDRESS FINANCIALLY DISTRESSED PROJECTS,TRANSFERRED STALLED PROJECTS TO NEW DEVELOPERS AND HAVE RECOVERED SUBSTANTIAL AMOUNTS OF COMPENSATION FROM FAULTING DEVELOPERS. BUT THE POINT IS, THESE MEASURES ARE A MERE DROP IN THE OCEAN, GIVEN THE SIZE AND QUANTUM OF THE RESIDENTIAL REAL ESTATE OF THE COUNTRY.
Tags : Real Estate Regulation and Development Act 2016 (RERA) RERA Ladakh Meghalaya Nagaland Sikkim Karnataka RERA