A front runner in implementing the Real Estate (Regulation and Development) Act (RERA), Maharashtra has seen the maximum registration of housing projects across the country. Over 16,000 projects have been registered so far. As the implementation of the Act completes one year next month, Maharashtra RERA chairperson Gautam Chatterjee spoke to Mint about the key challenges he has faced and how the authority is dealing with resolving some of the inherent issues faced by the sector.
Are you happy with the way RERA has been implemented in the state and how it has progressed in the last one year?
It cannot be a yes or no answer. The initial work of putting things in place to get a digital platform ready on the midnight of 30th April, 2017 was a challenge which we could meet satisfactorily. It wasn’t merely putting a system or web portal in place but preparing the stakeholders was also important. If I were to analyse the first year, the first quarter (90 days) was to bring all projects which were incomplete into the fold of the Act. That was the first challenge. There were a lot of rumours floating around that since things were not falling in place, the timeline would be extended but the effort was to tell developers—‘No’ it is sacrosanct and the provisions in the act cannot be changed. Fortunately we got 11,000 projects in our fold. Till the 28th of July (2017) we had only 1,500. The last three days of the quarter brought in around 8,500 registrations. And then I had people frantically calling ‘Sir, I just missed the bus’. With a slight penalty we allowed them to come in and we got another 2,000 in the next quarter. Now when this has happened people who are associated with projects wanted the second thing to be activated which is how do we raise grievances. Till date we have got around 2,400 complaints and have disposed of almost 1,200 of them.
What are some of the key challenges that you are currently dealing with?
My understanding of the Act on why incomplete projects are brought into the fold is because you want them to get completed.
Only when the project is completed and occupiable, then it is a win win situation for the developer, industry and 100% for the buyer...Out of 13,000 ongoing projects registered, around 8,000 were running overtime. Clearly there must be some problem. When a project is incomplete you will then register it by giving out a revised date of proposal for completion. When you do that, you are allowing him to come forward and put in time, money, energy and resources to complete the project. That I think is a big challenge... Secondly you have brought in an unregulated sector to regulation. It is a painful process. There would be a bunch of delinquents in this group (whose projects have been registered). Identifying them will take me time. As we reach towards the completion date, we will come to know whether he is able to perform or not. If not, how do you deal with them. Who is going to take those projects and complete them? These are some of challenges we have to deal with as we move forward.
Do you think RERA will change how real estate developers function? Do you see a lot of brokers and developers going out of business?
There will be structural changes but it will not be the way which some of the media houses have said that only big (builders) will survive, and that mergers and acquisitions is the only way ahead. I do not subscribe to that view. I have a feeling this will bring a lot of professionalism in the industry. On the contrary a smaller player with lesser margins, has lesser expenditure and also get into sectors where there are huge amount of buyers like affordable housing will survive. Of course, churning will have to take place. This is the most painful period. The first two -three years of the transition period will be really painful. But after this when we are able to sustain it, I see a very clean disciplined sector.
What are some of your priorities as we move in the second year?
Three priorities that I would be pursuing in the second year. We have been able to resolve some of the complaints but at the macro level, we have to monitor those unfinished projects which have been out with a revised timelines to be completed within the next year. There would be serious consequences if within the revised times if projects do not get completed. Also while dealing with these complaints we find that trust between the buyers and builders has been lost. We need to bring that trust. Therefore we have created a conciliation forum where both developers and consumers can sit together and find a way to solve the problems. Third is to reach out to the interior parts of Maharashtra, bring in greater awareness among both developers and consumers.