Haryana govt comes under flak from Centre for diluting Real Estate Act
The Real Estate (Regulation and Development) Act covers all ongoing projects that have yet to receive a completion certificate. But Haryana has tweaked its draft rule to keep out the majority of such projects from the law’s purview.india Updated: May 22, 2017 00:33 IST
The Centre is unhappy with the states, including BJP-ruled Haryana, over complaints from homebuyers that safeguards in a central law were diluted to favour real estate developers and for delaying notification of the rules.
The government enacted last year the landmark law designed to protect millions of homebuyers facing harassment because of limited legal options at times of dispute. Besides, the law is tough on realtors, who are accused of cheating clients and hitching their fortunes to illicit funds.
The Real Estate (Regulation and Development) Act covers all ongoing projects that have yet to receive a completion certificate. But Haryana has tweaked its draft rule to keep out the majority of such projects from the law’s purview.
Also, the state allows developers to withhold mandatory details such as their PAN, annual income declaration, and land ownership.
Rao Inderjit Singh, junior minister in the housing and urban poverty alleviation (HUPA) ministry, cautioned chief minister Manohar Lal Khattar in a letter last week that the changes breached the law and will be “open to legal challenge and liable to be struck down by the courts”.
He said the state’s draft rules will deprive homebuyers of ongoing projects the benefits the law is supposed to provide.
“…any dilution of the act would not be appreciated by millions of homebuyers in the state who have been waiting for long to get relief under the act,” wrote the minister, the BJP’s Gurgaon parliamentarian.
Hundreds of homebuyers in Haryana’s two boomtowns, Gurgaon and Faridabad, have alleged that property developers were not delivering flats on the promised time. Many of them have filed suits.
Junior information and broadcasting minister Rajyavardhan Singh Rathore was among the plaintiffs after he was sold an “uninhabitable” flat in Gurgaon last November.
The Supreme Court ordered Unitech last October to refund Rs 16.5 crore to 39 buyers, who have invested in the realty firm’s much-delayed Vista project in Gurgaon.
The real estate sector, which contributes about 9% of India’s gross domestic product, was an unorganised business until the central law was enacted. But to make it operational, states and Union territories were asked to notify their rules by April 30 this year.
Only 18 states and Union territories have done so, some in diluted forms. This includes BJP-ruled Uttar Pradesh, Gujarat and Maharashtra.
Union housing minister M Venkaiah Naidu asked chief ministers this April to implement the law in its “letter and spirit”. This May, at a review meeting in Lucknow, he discussed with Uttar Pradesh chief minister Yogi Adityanath about the state allegedly diluting provisions in the law.
The central rules that act as a template for the states allow 10% of the project or apartment cost as “compounding fee” — which means a defaulting developer can pay a fine to avoid going to jail. The Haryana rules put it between five and 10%, while UP didn’t mention any.
The Adityanath government began redrafting the state’s rules after Naidu’s intervention.