The Real Estate (Regulation and Development) Act (RERA), 2016, came into force in its entirety on May 1, 2017. It is seen as a big move to decode the unregulated real estate sector and to introduce regulations to ensure transparency, quality and provide a redressal mechanism to aggrieved buyers.
The RERA progress calls for applause, yet there are areas that need to be fixed. Each and every activity of developers is strictly under the scanner now. Where the underlying concern of the legislature is to afford preventive, ameliorative and remedial measures to a specified segment of the society, the legislation acquires the colour of a benevolent legislation. Such benevolence in spirit and object, which RERA seeks to accomplish, is clear from its features—RERA’s umbrage to salvage buyer interests is far-reaching.
– Its purpose is to mandate reporting of projects by developers along with requisite details at the time of registration. Some of these are the list of necessary approvals to develop the project, carpet area of units sold, possession timings, etc. The same is required to be displayed on their websites.
– Developers have to report the progress of construction on their websites. This ensures visibility of the current status of the project, which can enable buyers to make an informed decision about investing in a property. The provision stipulating a defect liability period of three years is another safety valve that ensures that the quality agreed by developers remains intact at the time of delivery of property.
– Developers now require consent from buyers as well as authorities before giving effect to any change. They are also prohibited from transferring the rights in a project before its completion and, therefore, cannot escape their accountability in respect of the units sold to buyers.
– There is an escrow account wherein sale proceeds from buyers are held in reserve. This ensures the funds collected from buyers are expended on development of projects and not on developers’ vested business interests. The stringency in withdrawal of funds from the escrow account supplements the above requirement, making it highly regulated.
– RERA regulates the manner in which promotion of the project takes place. Rather than being mere marketing gimmicks, advertisements have to be meaningful and have to display vital information relevant to purchase of properties.
Nevertheless, homebuyers are still disgruntled and allege financial clout and developers’ close links with officials, in the absence of any tangible outcome from the reforms. Therefore, the following aspects need to be revisited expeditiously to uphold RERA’s reforms:
– Inefficiency on the part of the states in notifying the respective rules to give effect to the central legislation is defying. While the states are coming forward and introducing their rules, there is no clear deadline that all states should adhere to, to implement RERA in its true spirit.
– There is a delay in setting up a permanent regulatory body in the states to watch over the affairs of developers. Barring a few states, others merely have an intermediary regulatory body overseeing implementation in the given states.
– With the leeway left for the states to dilute the provisions to make them more effective as applicable to their jurisdiction, the privilege has been misused. Arbitrary dilution of the provisions has given way to developers to continue to dodge buyers. Such dilution chokes the overall implementation and culminates in a poor progress.
– The regulator has repetitively stressed on the importance of having a common appellate forum to fix the menace of fraudulent practices in the home-buying sector. To illustrate, in the absence of line items on which the 70% funds deposited in the escrow account are to be spent, utilisation of funds remains a mystery. Ambiguities are being faced by various states since different practices have been adopted in different parts of the country.
It will be interesting to see how RERA regulates the mischiefs being played in the real estate industry. It would in best interests of all the stakeholders to come together and work jointly on common issues being raised by buyers. In the longer run, a symbiotic approach will help developers in recouping the vanishing trust, thereby streamlining their business cycles. This way, only serious players would survive in the market, resulting in better enforcement of RERA
Source : Economic Times