STILL ON THE UNSAFE SIDE
More than a year after implementing the Real Estate (Regulation and Development) Act (RERA), the legislation remains a non-starter on the ground in many states, posing a challenge to home-buyers and developers, experts say.
Among the states and Union Territories in India, Maharashtra takes the pride of place when it comes to proactive adoption, implementation and integration of the act, followed by Uttar Pradesh, Gujarat, Madhya Pradesh and Karnataka, according to the experts.
"As per respective state RERA websites in August 2018, more than 32,306 projects and 23,111 real estate agents have been registered under RERA across states. Maharashtra has the highest share of registered projects under RERA, accounting for 17,353," Anarock Property Consultants' Chairman Anuj Puri said.
According to him, Uttar Pradesh has 3,950 projects registered, Gujarat follows with 3,300 projects. The figures for Karnataka and Madhya Pradesh are 1,982 and 1,901, respectively.
"Despite some encouraging numbers, it is evident that RERA has not been adopted in the manner and to the extent the Centre originally intended. In some states, there have been serious developer-favouring dilutions of the clauses meant to protect the interests of buyers," Puri said.
The Real Estate (Regulation and Development) Act, 2016 – an act to establish a real estate regulatory authority – came into force on May 1, 2017.
If the act is implemented properly, it should ideally generate confidence among buyers by creating a level playing field between then and the sellers, which was "missing in the pre-RERA era", JLL India's Chief Economist and Head of Research Samantak Das said.
"States have notified the act but, unfortunately, the structures of the RERA machinery in most of the states have not been put in place," Das said.
Interim regulators with additional responsibilities "are in place in most of states while permanent regulators have been appointed in some states like Maharashtra, Madhya Pradesh and Punjab", he said.
"Interim regulators can be appointed according to the law, but interim regulators for an indefinite period is a lacuna.
"RERA is supposed to disseminate information to buyers so that anyone who is looking to buy a home can access all the information of a particular micro-market from a portal at the click of a mouse. Again, except for a few, many states have portals running without enough information. In terms of disseminating information, they fall short of expectations," Das added.
Many states do not even have an online portal till now and projects have to be registered manually, which is a troublesome exercise, Das said.
Maharashtra probably is the only state till now to have a robust portal providing adequate information to buyers, he said. More than 60 per cent of RERA-registered projects are from Maharashtra, followed by Uttar Pradesh and Gujarat, he said. The share of the other states would go up once they have their own online portals.
He said there was an uptick in sales of residential projects in Mumbai and Pune during the January-June period of 2018 and the better implementation of RERA in Maharashtra played a "vital role" in this.
"After constituting a model act at the central level, the Union government has a role to look at whether the states are adhering to the central legislation and implementing it in true letter and spirit. A comprehensive structure of RERA machinery is a must for the sector," Das said, adding that it will be at least two years before "RERA will be up and running in the way buyers, developers and real estate experts want".
Moreover, every state has modified the central act some way or the other while enacting their respective acts.
"While many states are still in the process of notifying their RERA rules, there has been continuous fretting about the dilution of the rules recently notified by many states. In fact, there are multiple changes made by different states in the RERA proposed initially by the central government," Puri pointed out.
Dilution in ongoing projects' definitions left a huge number of projects out of the RERA ambit, and this is understandably a major concern for buyers, he said.