By: Meenakshi Iyer and Aditya Deolekar
Real Estate (Development and Regulation) Act, 2016 (RERA) is considered to be a path breaking legislation and a significant reform initiative of the central government in recent times. RERA was enacted with the objective of empowering property buyers and making property transactions fair and transparent. A year on since the implementation of RERA, the question that lingers is “Have the objectives been met?”
A closer examination of the progress in different Indian states reveals that the implementation has been erratic. In fact a permanent regulator is still not appointed in many states. Out of all the states and union territories in the country (36 in all), 23 have framed rules under RERA and out of these 6 have a fully functional permanent regulatory authority while the remaining 17 have an interim authority. As regards the remaining 13, it appears to be work in progress still. This lack of uniformity in implementation across the country is rather disappointing and perhaps lends credence to rumours that hectic lobbying by the builders’ lobby has managed to delay, if not thwart, the implementation process in various states.
Incidentally, Maharashtra was the first state to implement RERA. Statistics reveal that RERA has gathered a lot more momentum in Maharashtra than in any other state in India. This is evident from the large number of projects registered under MahaRERA as compared to those registered on a pan-India basis. Currently, 27,000 projects are registered under RERA across India, out of which about 16,000 projects are registered in Maharashtra alone. Maharashtra was the first state in India to set up an Alternate Dispute Resolution (ADR) mechanism under RERA, which has disposed of more than 80% of the complaints registered with it. Maharashtra has also recently set up the Appellate Tribunal that has in its first ruling brought even leases under the purview of RERA.
Regardless of the lethargic implementation of RERA in many states and the delay in setting up the permanent regulator, the stringent provisions under the law have helped revive the stagnant residential real estate market across the country by catalyzing project execution and delivery. While the law is primarily intended to protect the interests of the home buyers, there have been efforts to adopt a balanced approach and recognize the difficulties faced in project implementation. As a case in point, MahaRERA recently held that builders are also entitled to interest on delayed payments from buyers.
The real estate sector in India is one of the largest job creators and is a major contributor to the economy. Many prominent developers have expressed the view that increased transparency mandated by RERA has translated to an increase in enquiries and bookings for projects. Credible sources have also reported that there has been an 8% hike in housing demand in the first quarter of 2018 as compared to the last quarter of 2017 and that residential sales have registered a 33% increase in the top 9 cities during this period. It has also been reported that residential sales exceeded new supply by 5% during the last two years. These numbers suggest that RERA has played a part in improving market sentiments and driving up sales.
The other key aspect of RERA is the speedy redressal provided to consumer grievances. It has been reported that in Maharashtra alone more than 16,000 cases have been registered under RERA and more than 1000 complaints have been resolved since the implementation of RERA in the state. Till date, MahaRERA appears to have fined more than 1000 errant developers and has issued recovery warrants against developers who have failed to comply with its orders to refund home buyers. The quicker grievance redressal process (60 days from the date of filing) has helped boost buyer morale and confidence.
Implementation of RERA has had a significant impact on the real estate market. As the real estate sector becomes more efficient and transparent, the demand for organized, viable and legally compliant projects is expected to increase in the future.