If States Keep Diluting RERA, Real Estate Woes Will Never End

Disclosures under an undiluted RERA would lead to more transparency and answerability by developers to homebuyers.

3 min read
With a new law to regulate the real estate sector, will the woes of the builders be addressed alongwith buyers? (Photo: Lijumol Joseph/ <b>The Quint</b>)

The Ministry of Housing and Urban Poverty Alleviation (MHUPA) has been working overtime following up with the various states to ensure a smooth and timely implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA).

However, in response to the Centre’s efforts, only a few states have implemented RERA by notifying the rules and ensuring that a regulatory mechanism (including setting up of the Authority and the Appellate Tribunal of the State) will be implemented, which will come to the rescue of thousands of aggrieved home buyers pan India.

Are States Going Soft on RERA Implementation?

31 March 2017 was the date set for mandatory compliance by the various states. However, a total of only 13 states (including Union Territories) had successfully notified the rules under RERA. Thereafter, a few more states have been working quickly to notify their rules and appoint “interim” authorities until the full-time regulatory authority is set up.

For instance, Uttar Pradesh has appointed Additional Cabinet Secretary, Housing and Planning as the Interim Chairman of RERA and similarly Bihar has appointed the Principle Secretary for Urban Development. Needless to say, the response by the states for the timely implementation of RERA has been soft – at best.

This has resulted in growing anxiousness and despair for aggrieved homebuyers who wanted to expedite the process of finally obtaining possession of their long-awaited homes. Groups of persons such as the Noida Extension Flat Owners Welfare Association have been actively following up on dilution of Uttar Pradesh RERA rules and have directly approached Uttar Pradesh Chief Minister highlighting their concerns.

Dilution - A Major Cause For Concern?

RERA shall be implemented by the various states on the basis of the respective rules framed by them for enforcement. Dilution of these rules by the states in favour of developers has been a cause of concern, which has even lead to the Committee on Subordinate Legislation of Lok Sabha taking up the matter with the MHUPA and discussing such possible dilution in detail.

If States Keep Diluting RERA, Real Estate Woes Will Never End

There is no ambiguity in the fact that states have inserted certain provisions in their rules under RERA which could reduce the efficacy of the law in that particular state. For instance, Haryana's draft rules under RERA conveniently left out certain disclosures to be made by builders on the sanctioned plan, layout, specifications at the time of booking etc.

These disclosures would lead to increased transparency and answerability by developers to homebuyers. Similarly, the Maharashtra rules have included a provision which allows builders to divest from a project after an occupancy certificate has been issued for that project, which allows the builder to pull out their investment before completion of common areas and facilities of that project.

Similarly, UP has diluted its definition of “Ongoing Projects” by specifying certain triggers for exclusion for projects which have handed over common areas/facilities to the Resident Welfare Association, projects where all development works have been completed, projects for which lease deeds for sixty percent of apartments have been executed, etc.

Will RERA See Successful Implementation?

Dilution of the rules by the states could be tantamount to circumvention of the safeguards provided under RERA. The legislative intent behind RERA is simply to safeguard and enforce the contractual obligations between the Developer and homebuyers. The implementation of RERA could be unsuccessful simply because developers will have a lot of room to “work around” the requirements mandated by this unprecedented law.

Some states such as Bihar and Odisha have shown a more forthcoming attitude towards the implementation of RERA by making minimal changes to their respective rules, thereby mitigating any chances of dilution/ambiguity in interpretation during its implementation. There is a growing pressure on the states as well as the MHUPA for RERA’s undiluted implementation.

Recently appointed Chief Minister Yogi Adityanath of Uttar Pradesh has assured the Honorable Minister Mr Venkaiah Naidu that they will revisit the rules notified by the Centre in order to ensure better enforcement of RERA with minimal dilution. In the event that most states adopt this positive attitude, RERA may prove to be an unparalleled success which could transform this previously unregulated sector.

(The writer is a real estate lawyer based in New Delhi. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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