The states are blocking the Centre’s landmark initiative to create transparency in the real estate sector as only 14 of them, including Union Territories, have so far implemented the Real Estate (Regulation and Development) Act (RERA), 2016. The Act was supposed to be implemented by all states from 1 May. Only three states have set up a state level regulatory authority so far.
While states are delaying implementation, most of the BJP states, according to sources, have diluted the provisions of the Act, apparently under pressure from the builders’ lobby, by keeping most of the ongoing projects out of RERA’s ambit. Homebuyers’ groups have drawn the attention towards this issue of Union Housing Minister M. Venkaiah Naidu and they hope that Prime Minister Narendra Modi would not allow any dilution of the Act by the states.
Besides excluding ongoing and incomplete projects, the states have also tried to relax norms in favour of the builders. The dilutions have happened despite the Centre’s repeated warnings. Naidu has been making efforts to ensure that there are no dilutions.
According to sources, the rules framed by Bihar, Odisha and Uttarakhand, are quite similar to those framed by the Centre and therefore, friendly to homebuyers. Interestingly, in Uttarakhand, the rules were framed by the previous Congress government. Therefore, sources said, the performance of non-BJP states has been satisfactory so far in terms of retaining the basic spirit of RERA.
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 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. All the states have to frame rules and set up their own regulators. RERA was supposed to be implemented from 1 May this year.
However, till now only 14 states, including UTs, have notified the rules and only four states—Kerala, Madhya Pradesh, Delhi and Maharashtra—have set up a state level regulatory authority. Sources said other states are still in the process of framing rules.
As per the provisions of the Act, the developer has to declare to the authority all the details of the project. All this information has to be regularly updated and made available to the buyers on the regulator’s website. The regulator’s 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 a particular project.
“Fight for RERA”, a group of prospective homebuyers, has been pushing the Centre to ensure that the states do not deviate from the rules framed by the ministry. Speaking to this newspaper, convenor Abhay Upadhyay said: “We hope the Minister and the Prime Minister will look into the matter and ensure that the basic spirit of RERA is not lost. At the same time, we would also want them to work with states so that the regulators are in place at the earliest. Most of the states have already missed the deadline.”
Some builders are trying to mislead the homebuyers by saying RERA cannot penalise the builders/promoters for past delays in completion of ongoing projects as the Act does not permit the same. They are also creating a perception that the promoters can only be penalised if they fail to complete their projects within the new timelines provided at the time of registration of these ongoing projects.
Refuting such interpretations, Upadhyay said this was another attempt by the builders’ lobby to circumvent and influence decision-making before the slew of cases that are expected to be filed before the regulators. “This is an attempt to frustrate the enthusiasm and confidence of homebuyers which has been achieved due to promulgation of this new legislation,” he added
At a function held recently in the national capital, Rajiv Ranjan Mishra, joint secretary, Ministry of Housing and Urban Poverty Alleviation, asked the states to complete the process of notification and appointment of full-time regulators at the earliest.
He said that states should desist from changing the fundamental rules of the Act. “There would be state-specific issues, which will require diverse solutions and states should consider them,” he added.