Most states lag in implementation of Real Estate Act

Most of the states are lagging in implementing the Real Estate (Regulation and Development) Act (RERA), 2016, and have not set up state level regulatory authorities. So far only three states have set up regulators even though the Act is supposed to be implemented all over the country from 1 May.

Moreover, the states that have framed the Rules have substantially diluted the provisions of the Act, thereby killing its basic spirit of providing protection to the consumer and bringing in transparency to the entire sector.

The RERA Act, which came into force in May last year, provides a speedy dispute resolution mechanism in case of default by the developers. It also stipulates the compulsory registration of all the residential real estate projects with the regulator, where plot sizes are more than 500 sq m. This also applies to ongoing, under-construction projects. Accordingly, all the states have to frame Rules and set up their own regulators.

However, till now only Kerala, Madhya Pradesh and Delhi have set up state level regulatory authorities. It is to be noted that many home buyers have deferred their buying decision till the Act gets implemented as they feel it will be safe to invest after regulators are in place.

RERA, it is to be noted, is to be implemented from 1 May 2017, as proposed in the Act. For this, all state governments will have to put in place the Act’s rules and regulations for their respective states. The last date to do so was 30 October 2016. However, most of the states have missed the deadline.

Till now only Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh, apart from the Union Territories have notified the real estate rules. As regards Punjab and Uttarakhand, they have not been able to notify the rules because of the Assembly elections.

This month Urban Development Minister M. Venkaiah Naidu held a meeting with chief secretaries and other senior officials of states and UTs, in order to review the preparations for launching the Act. Various other aspects related to the Act were also discussed.

As per provisions of the Act, the developer has to declare to the Authority all the details related to the project. All this information has to be regularly updated and made available to the buyers on the regulator’s website. The regulator website will carry a list of defaulting developers. Besides, the developer has to deposit 70% of the money collected from homebuyers in an escrow account, for the particular project.

During the meeting, the government clarified that there would be no amendments to the Act as full implementation would begin in May this year when Real Estate Regulatory Authorities and Appellate Tribunals would become functional. Naidu, during the meeting, said there would not be any compromise with the spirit of the Act.

The RERA Act, which came into force in May last year, provides a speedy dispute resolution mechanism in case of default by the developers

Fight for RERA, a group of prospective home buyers, is pushing the government for speedy implementation of the Act. The group has demanded that the Centre should ensure that the state governments do not dilute the provisions of the Act while framing rules.

Speaking to The Sunday Guardian, national convenor of Fight for RERA, Abhay Upadhyay said: “It is a matter of grave concern that many states are diluting the provisions of the Act, which was passed by Parliament to protect the rights of the consumers. We have conveyed our concern to the Urban Development Minister M. Venkaiah Naidu and Prime Minister Narendra Modi.”

For example, Upadhyay said, some states have notified incomplete rules compared to the set of rules provided in the Act. In some cases, like Gujarat, ongoing projects have been removed, whereas the Act clearly stipulates that ongoing projects would also be covered.

In case of MP and Rajasthan, the rules are a copy of the Draft Real Estate Rules uploaded by the Ministry of Urban Poverty Alleviation on 24 June 2016 and thus all gaping holes are there which were finally removed in the final Rules notified by the Ministry later on 31 October 2016.

“There should be uniformity as far as implementation of the Act is concerned. The  provisions of the Act, finalised by the Centre, are pro-consumer and very good. These provisions should be there all over the country. Unless this uniformity is ensured, the Act cannot be implemented in letter and spirit,” Upadhyay added.