Between now and year 2030, approximately 700 - 900 million sq meters of urban space every year will required to be constructed and urban rejuvenation will also come through in-situ slum development and redevelopment.

Geographically, India is the seventh largest country in the world with around 3,287,240 sq. km. area. But surprisingly until the year 2016, there was no specific central legislation to govern the real estate sector. Real estate is a highly recognized and regulated sector globally. In the past few decades, this sector has proliferated largely in India, making it the second-largest player in the world economy. Until 2016, apart from the general consumer and property laws in the country, there was no specific statute to regulate and govern this sector. Therefore, this Government passed The Real Estate (Regulation and Development) Act, 2016.

In a landmark move, the central government, in the form of RERA, gave the real estate sector its first regulator w.e.f. from 1^st May, 2016. The Union Ministry of Housing & Urban Affairs, however, gave time to states till 1^st May, 2017, to formulate & notify rules for the functioning of the regulator.

 

Hon’ble Prime Minister on the occasion of 70^thIndependence Day on 15^thAugust 2016 summarized the problems faced by the middle class and said that:

“a middle class person wants to construct his own house, wants to buy a flat. Builders lobby shows him a beautifully printed booklet and the helpless soul falls prey to it. He is not having any technical knowledge, he pays the instalments but he is not getting the promised house in time. A middle class makes one house in his whole life and in it he invests all his capital. Brothers and Sisters, we have put a check by passing the “Real Estate Bill”, so that a middle class should not face any problem if he wishes to own a house. We have worked for this.”

RERA is aimed at establishing real estate regulatory authority for regulating and promotion of the real estate sector, ensuring efficient and transparent transactions and establishing an adjudicating mechanism for speedy dispute redressal, thereby protecting the interests of consumers. It seeks to address vital issues of fair transactions, timely delivery and quality construction.

 

RERA has come as a big relief in the backdrop of lakhs of aggrieved home buyers across India protesting against long delays in delivering their homes in which they have invested their hard earned money. Earlier, home buyers would fall prey to unscrupulous builders, luring them to invest in unapproved projects, promising high returns. But now under RERA, buyers interests are protected as only registered developers can launch projects. Moreover, developers cannot launch and advertise their projects and seek customers' bookings, without getting all the required permissions from the authorities. They are also barred from arbitrarily charging the booking amount as under the new regulation, booking amount has been fixed at 10 percent of the property cost.

 

RERA has also made it mandatory for developers/project promoters to make all necessary disclosures about projects including permissions secured from authorities, date of launch, promised date of delivery, project specifications, amenities/facilities etc. And all this information is to be loaded on the project website by the builder. This information will also be available on the website of development authority. In the light of these mandatory disclosures, consumers will be able to do proper due diligence of properties and take informed decision about investing in a particular property, thereby ensuring the safety of their investment.

 

RERA aims to ensure Good Governance through greater transparency & accountability.
 

It is reassuring to see the consumer & builder, beginning to look at the positive aspects of RERA. People have begun to not only appreciate the virtue & importance of RERA but also realize that you cannot have a situation without it.

 

 

Some of the major provisions of the Act, besides mandatory registration of projects and Real Estate Agents include:

 

• Depositing 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects;
• Projects with plot size of minimum 500 sq.mt or 8 apartments shall be registered with Regulatory Authorities;
• Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays;
• Liability of developers for structural defects for five years;
• Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities;
• Sale of property only on carpet area (actual usable area) basis.
• Bar of Jurisdiction of civil court.

In order to cure one of the major loopholes in the Consumer Protection Act, 1986, RERA introduced several penal provisions. RERA has both remedial and as well as penal provisions to regulate the real estate sector.

 

5. PROGRESS UNDER RERA:

• Notification of Rules under RERA: All the States/UTs (28) have notified except the 6 north eastern states and West Bengal.
• Real Estate Regulatory Authority: 27 States/UTs have established the Authority, out of which 14 States/UTs are interim.
• Real Estate Appellate Tribunal: 20 States/UTs have established the Tribunal, out of which 13 States/UTs are interim.
• Registration: To bring uniformity, professionalism, and standardization in the real estate sector, RERA has made the registration of the following mandatory with the RERA:

• Real Estate Project: All the promoters before advertising, marketing, booking, selling or offering for sale whole or any part of their real estate project have to get it registered with the Authority. This registration is mandatory when the project exceeds the limit. This provision will curb the practice of pre-launch sale. So far more than 32,500 Real Estate Projects have been registered under RERA across the country.

 

• Real Estate Agent: All the real estate agents have to get themselves registered with the Authority before facilitating or acting on behalf of any person to facilitate the sale or purchase of any real estate. A registration number shall be granted to the agent at the time of registration which has to be quoted by him in every sale he facilitates as per the provisions of the Act. So far more than 25,000 Real Estate Agents have been registered under RERA across the country.

 

Total 21 States/ UTs have set up web-portal by giving facility of online registration.

RERA intend to:

• regulate and promote real estate sector;
• protect the interest of consumers;
• bring a smooth flow of even information between both the promoter and the purchaser;
• bring accountability of the promoters towards the purchasers; e.) ensure a transparent and efficient sale in this sector;
• bring a balance of responsibility between both the parties;
• bring uniformity, professionalism, and standardization in different business transactions and practices in this sector;
• to establish a mechanism for fast-track dispute resolution;
• aims to ensure that there is accountability towards allottees & their interest will be protected;
• ensures fair-play and infuses transparency & reducing frauds;
• aims to increase professionalism & pan India standardization, along with establishing symmetry of information between the promoter & the allottees;
• also aims to enforce a fast-track dispute resolution mechanism.

The real estate sector will usher in standardized processes and procedures that the industry needs to progress. RERA, along with other policy initiatives like granting industry status to affordable housing, extending concessional tax rate on interest for qualifying foreign debt and permanent residency status to foreign investors, subject to minimum investment and employment criteria, as a positive step that will make India more investment- friendly, opening doors for foreign investment.

By aiming to bring transparency and accountability in the sector, RERA is changing the general perception about the real estate sector.

Few States have performed very well and few could not due to some reasons. Our government’s vision of 'New India' can be realized ‘only through the combined efforts of all the states’ as ‘Team India’ with the spirit of cooperative federalism. Southern states have also performed well.

RERA intends to increase transparency and accountability in the real estate sector. It provides various machineries to facilitate and regulate the transactions in commercial as well as residential projects and ensures timely project completion by the promoters. However, this would happen only if there is an efficient implementation by the State Government.A few states have tweaked the RERA provisions but the government is committed to ensure that the Act is implemented in its letter and spirit.

 

It is appreciable that Karnataka, despite having its own state Act similar to RERA, have repealed its Karnataka Real Estate (Regulation and Development) Act, 2015andnotified the state rules under RERA. Similarly, West Bengal may replicate by repealing its state Act (Housing Industry Regulation Act) and notify the rules under RERA in order to strengthen the sector and help the home buyers without any confusion.

 

The deliberations, suggestions and the take away that arise from today’s workshop (RERA- a New Era of Transparency and Accountability in Real Estate – 2 years of implementation and Way Ahead) would go a long way in help all the stakeholders of the real estate sector to greater heights by showing the path ahead.

 

Thank you, Jai Hind.

 

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