The Real Estate (Regulation and Development) Act (RERA) is India’s first watchdog for real estate, a sector that had long remained unregulated. The Act was introduced in May 2016 and it came into effect in May 2017. RERA seeks to bring clarity and fair practices to protect the interests of buyers and impose penalties on errant builders.
But, more than two years later, the implementation of RERA, has not been up to expectations. Lack of preparedness, and social and political challenges have seen some States still not complying with RERA. On the positive side, though, in States that have implemented RERA, such as Maharashtra and Karnataka, prices are moderating and there has been a slow recovery in the real estate sector.
Progress in States
Even in the many States that have implemented RERA, the confidence of buyers’ is yet to return. The slow pace of implementation of RERA provisions, and less than anticipated number of project and agents registrations are the key factors for low demand in the real estate market.High property prices have not helped either.
While many States have notified rules under RERA, four north-eastern States — Arunachal Pradesh, Meghalaya, Nagaland and Sikkim — are yet to do so. This is mainly due to issues related to land belonging to certain communities, though these issues are expected to be resolved at the earliest. Assam and Manipur have notified the rules and established an interim authority.
As per the data on August 3, 43,208 projects are registered with RERA across India. To provide transparency to buyers, every State’s RERA is expected to conduct online registration through its web portal. As per recent data, 24 States have a functioning official portal.
For instance, in Madhya Pradesh, a little over 2,200 projects were registered after nearly three years of RERA implementation. Odisha has 285 registered projects. Maharashtra takes the lead with 21,742 projects, accounting for nearly 50 per cent of total projects registered in the country. Though the progress of registration is slow in a few States, the web portals set up by many States provide details about promoters, projects, project status and registered real estate agents.
Needs improvement
Each State is to have a real estate authority that will be responsible for implementation of rules and regulations in the market and ensure transparency of transactions. So far, 29 states and Union Territories have set up this authority, of which nine have interim (temporary) authorities with seven yet to appoint one. Though a few States do have interim regulators, their efforts fall short of the intended goal of a dedicated real estate regulator, leaving consumers in the lurch. Setting up a regular regulatory authority is critical to monitoring the Act’s implementation.
As per RERA guidelines, every State has to establish an Appellate Tribunal to deal with the grievances and offer timely redressal. If a promoter has violated the agreement terms or has delayed handing over a project, a consumer can approach this tribunal and make a complaint. The Appellate Tribunal is expected to adjudicate cases within two months.
Unlike other consumer forums or the National Consumer Disputes Redressal Commission (NCDRC), RERA looks only into real estate cases. Therefore, a permanent tribunal plays a significant role in the disposal of real estate cases.
Given the disparity in the manner in which each State collates the details of complaints and pending cases, the only parameter available for uniform comparison is the number of cases disposed by the adjudicating authority (RERA authority). As per recent data, only 13 States and UTs have permanent tribunals while nine, including Telangana, Punjab, Uttarakhand and Gujarat, have interim tribunals. The remaining States/UTs, including Andhra Pradesh, Chhattisgarh, Kerala, Nagaland and Mizoram, are yet to establish an appellate tribunal. Therefore, the progress of complaints registered and settled in these States is unknown.
However, according to industry experts, a large inventory of projects remains outside the purview of RERA, and the number of projects registered represents a very small number. Thus, RERA’s objective of protecting the buyers’ interest continues to remain elusive.
What’s next
Learning from the progress made by Maharashtra on RERA would help spur growth and bring new investments to real estate market.
Since its launch, MahaRERA has kept buyers’ interest at the forefront. An individual can view projects online to know the development status and expected date of completion, thereby bringing transparency into transactions. By penalising promoters for not sticking to timelines, it also ensures there is no delay in project hand-over.
Its success is in the fast-track dispute mechanism — the conciliation forum. According to statistics available on the MahaRERA website, of the total 8,475 complaints received, orders were passed for 5,373. Uttar Pradesh has followed Maharashtra’s footsteps in establishing a conciliation forum for speedy disposal of issues.
Other States need to draw lessons from Maharashtra, to restore the faith of homebuyers, particularly in the case of under-construction projects. The first step would be to get the portal running efficiently and providing timely updates online. This is imperative to remove ambiguities in real estate projects.