One year of RERA: 27 states & UTs notify rules, 27,000 real estate projects registered

As many as 27 states and union territories have notified rules under RERA so far and 16 states and union territories have a fully operational web portal for enabling online registration of real estate projects and agents, as per the latest statistics available.

Till date, a total of 27,000 real estate projects have been registered with the regulatory authorities across the country and approximately 17,000 applications for registration of agents received so far, says the data on the implementation of RERA.

Maharashtra, Madhya Pradesh, Punjab and Gujarat are the four states who have been forerunners when it comes to implementation of the Act, as per the data.

To a question on RERA, housing and urban affairs minister Hardeep Puri had told Moneycontrol in an exclusive interview that the real estate sector is better off with RERA. “RERA is wonderful from my point of view. That is why the unscrupulous builders and promoters challenged it. They took the challenge and the Supreme Court asked the Bombay High Court to hear it and Bombay High Court has thrown it out. So, having a regulator is a great thing. I mean, you cannot run this sector without having a regulator. It took us eight years or so to resurrect it as it was languishing. Now it is only a few months old. In the process of implementing it, some state governments tweaked its provisions to leave the ongoing projects out of its ambit. But courts have taken cognizance of that. We have done whatever we could and we are willing to do more… we are now dealing with a situation where the kind of pre RERA world will no longer be possible. Now people will have the protection which the Act provides and the developer or the promoter is liable as he has assumed certain obligations.”

But experts think otherwise.

“Despite two years since RERA was passed by both houses of Parliament, its implementation is still very slow. RERA being central legislation, its entirely the duty of Central government to ensure that RERA is strictly implemented across India but sadly, it appears that present dispensation at the Ministry of Housing and Urban affairs has pushed RERA to the back bench. It is nowhere when compared with GST implementation by Ministry of Finance and it clearly appears that real estate developers are succeeding in their objective through back door to render RERA redundant,” says Abhay Upadhyay, President, Forum For People's Collective Efforts and member, Central Advisory Council, RERA, Ministry of Housing and Urban Affairs, Government of India.

Other experts feel it has achieved what it set out to do.

"As many as 70 percent projects have been covered under RERA so far. This is encouraging considering that this is the first stage of its implementation. Having said that, a central data repository should also have been created," says Pankaj Kapoor, managing director of Liases Foras Real Estate Rating & Research Pvt Ltd.

"RERA is a deterrent for real estate developers. Till date, Maharashtra is leading the way so far as its implementation is concerned. It has digitised all the processes, so much so that the portal even captures the absorption statistics. Other states need to follow suit," says Samir Jasuja, founder and CEO of PropEquity.

The central Real Estate (Regulation and Development) Act (RERA) came into effect on May 1, 2017, exactly a year after it was passed by the Parliament. As per the Act, developers, projects, and agents had till July 31, 2017 to mandatorily register their projects with the Real Estate Regulatory Authority. Any unregistered project would be deemed to be unauthorised by the regulator.

The two states that have drafted rules but have not yet notified RERA include Kerala and West Bengal. West Bengal has decided not to implement Central Act. Instead, it has passed its own West Bengal Housing Industry Regulation Act 2017.

Only eight states and union territories have established a permanent real estate regulatory authority. This includes Andhra Pradesh, Gujarat, Madhya Pradesh, Maharashtra, Odisha, Punjab, Dadra and Nagar Haveli and Daman and Diu.

19 states and union territories have established an interim real estate regulatory authority.

Only three states and union territories that include Gujarat, Tamil Nadu and the union territory of Andaman and Nicobar have established the regular appellate tribunal. A total of 13 states and union territories have appointed interim appellate tribunal under the Act.

16 states and union territories have made a fully operational web portal for enabling online registration of real estate projects and agents. These include Andhra Pradesh, Goa, Gujarat, Himachal Pradesh, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Andaman and Nicobar, Chandigarh, Dadar and Nagar Haveli & Daman and Diu.

As per Section 4(3) of the Act, registration is permitted online and offline for one year. This means that this is permissible until end of this month – April 30, 2018.

Six states and union territories that have constitutional issues as land in these states belong to the community or autonomous councils include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Sikkim.

Under RERA each state and UT will have its own Regulatory Authority which will frame regulations and rules according to the Act. But not all states have a real estate authority in place yet and some with one have diluted the original provisions as per the Central Act.

RERA covers both new project launches and on-going projects where the completion/occupation certificate has not been received.

According to the provisions of the Act, for ongoing projects which don’t have a completion certificate issued, developers had to make an application to the authority for registration of projects within a period of three months from the date of commencement of this Act which was May 1.

Under RERA, a developer cannot sell residential or commercial units in a project, ongoing or new, unless those are registered with the regulatory authorities. The Act also calls for mandatory registration of real estate agents and calls for developers to set aside 70 per cent of the funds collected from buyers in a separate escrow account to ensure that projects are completed on time.

Most states have diluted rules to favour developers. Many states have moved away from the Centre’s definition of ongoing projects and excluded projects for which lease deeds of either 50 percent or 60 percent of the apartments have been executed or for which partial completion or occupation certificates have been obtained by the developer. This leaves little hope for homebuyers stuck with old unfinished projects.

On December 6 last year, the Bombay High Court had upheld the constitutional validity of the Act and its applicability to ongoing projects across states. The court also granted RERA authority more powers to grant additional time in exceptional cases to builders to complete projects. This extra time is to be granted to developers in compelling circumstances on a case-by-case basis, the order had said.

“In a welcome clarification from the Bombay High Court, the RERA Authority would have to view the entire act holistically and appreciate provisions of the beneficial legislation. The court  also clarified that even the association of allottees may have the first right to develop in case of promoter default, however  RERA Authority could in light of the purpose of ensuring completion of the development work within the  stipulated  time,  if the authority  does not find any deliberate lapse on the part of the promoters and there are exceptional circumstances compelling in nature which prevented the promoter to complete the development work, then it shall necessary for the authority to continue the same promoter under its directions,” says Sudip Mullick who leads the real estate and infrastructure team at Khaitan & Co.

Last week, the Maharashtra Real Estate Regulatory Authority imposed a Rs 50 lakh-fine on Piramal Realty for violating the Real Estate (Regulation & Development) Act, 2016. The real estate developer failed to add MahaRERA’s website address in an advertisement published in a national daily. It also carried the project's registration number on the second page of the ad instead of the first that too in "very small" font size.

As per media reports, Haryana Real Estate Regulatory Authority, Gurugram had imposed a penalty of Rs 30 lakh on a private developer for inviting applications for a project without registering the project with the regulatory body.