The real estate act is finally a reality after a nine-year wait, as it came into force on May 1. The promise is to protect the rights of consumers and usher in transparency in a largely unregulated sector. But only 13 states and Union Territories (UTs) have so far notified rules and fewer still have formed an authority to enforce the provisions of RERA.
In March 2016, both houses of the Parliament passed the real estate bill. It is a model law, which means it is up to the states to draft and pass their own laws according to the guidelines, as land is a state subject. This, point out critics has allowed states the liberty to dilute the provisions of RERA. The motive of the Act was to ensure timely handing over of projects by builders, compliance by builders with necessary clearances and preventing diversion of project funds. But the purpose would be defeated if states water down the provisions of the Act.
The Centre had asked all states to notify the Act before April 30. All real estate developers and agents are to register with their respective state regulatory authorities by July 30. A status check:
States that have notified RERA:
- Uttar Pradesh
- Andhra Pradesh
- Madhya Pradesh
And the UTs are:
- Andaman and Nicobar Islands
- Daman and Diu
- Dadra and Nagar Haveli
States that have appointed a housing regulator: Maharashtra, Madhya Pradesh, Gujarat and Andhra Pradesh have appointed a housing regulator.
States that have set up the website required for registration and application of new projects: Maharashtra and Madhya Pradesh have set up a website where developers and brokers can register or apply for new projects under RERA.
How it impacts builders
Accountability and transparency are two thrust areas of RERA, and builders will have to ensure compliance to avoid punishments. The Act provides for penalty as well as imprisonment. Builders need to have trustworthy credentials to start a project and it will be monitored during the registration of the project with the state authority. During registration information about clearances, annual report, balance sheet, cash flow statement and auditor’s report need to be provided. The legal title deed and ownership documents are also necessary. To increase transparency, carpet area has to be defined and Timely completion of project is a must, failing which buyers will have to be compensated with an interest rate of State Bank of India’s highest marginal cost of lending rate plus two per cent, within 45 days of it becoming due.
Only serious builders will be in race: "One needs lots of preparation and needs to be precise while filing the online information about the project. You cannot give misleading or incomplete ones as rectification later is very difficult procedure. The greatest advantage was it will bring about accountability as only serious buiders will be in race."
Nayan Shah, CEO, Mayfair Housing, Maharashtra;
first to register with RERA in the country
Housing loans will get cheaper: "It’s a welcome move. We believe it will regularize the sector and eventually make housing somewhat cheaper for the end user- buyers. Though project costs are expected to go up, but housing loans are likely to get cheaper which will open up the market for a new segment of buyers"
Chitrak Shah of Shivalik group,
one of Ahmedabad’s biggest real estate developers
How it impacts property dealers
Property dealers will have to register by paying a fee. Presently, brokers and agents are the most unorganized community giving misleading claims to attract buyers. But registration would ensure weeding out non-serious players. And non-compliance with the provisions of RERA would attract punishment.
RERA silent on penalties: "RERA will professionalise the brokerage sector and it will attract good talented people. However despite registering, RERA has been silent on penalties to be imposed on those who default on our brokerages."
Vikram Mehta, President, Confederation of Real Estate Brokers of India (CREBAI)
"We do not still know the fine prints of the Act, but the registration will ensure that only those qualified are able to remain in the market"
Dhaval Patel, a broker in Ahmedabad.
Serious players will remain: "RERA has come as good news for property brokers. The sector needed to be organised as there seemed to be presence of property brokers at every nook and corner of the cities. Since, there is a provision for registration with RERA now only serious players will remain in the business"
Pradeep Karambelkar, a Bhopal based property broker
How it impacts consumers
A long time in the making, RERA promises to help buyers, who usually put their life’s earnings at the mercy of powerful builders without adequate legal provisions to take them on. Lack of awareness among buyers about builders and their rights is also an issue, say experts. RERA looks at resolving both; a buyer’s helplessness at the hands of builders and also provide full information about a property developer.
Still waiting: "I have read about RERA, but am still waiting for Uttar Pradesh to launch the website, so that I can read up about the credentials of builders"
SK Dhawan, a Noida resident
Can RERA help me: "I have got possession of my flat but I have doubts about the quality of my building. I have also not been given everything that was promised by the builder. But can RERA help me if I have already got possession?"
Avineet Dwivedi, a Faridabad resident