RERA MAKES THE PAST TENSE FOR REALTORS
Developers who have not given possession of houses fear action if law is enacted retrospectively
More than the future, real estate developers are worried about their past as they wait anxiously for implementation of the Real Estate (Regulation and Development) Act, 2016, or Rera, from May 1.
According to experts, if enforced retrospectively, a possibility as it is part of the clauses, developers which have not given possession of houses to customers could be penalised, including mandatory jail time.
Under the Act, cleared by Parliament in March last year, real estate companies, perceived to be a non-transparent lot, would have to give a slew of details to a proposed regulator. Violations are likely to attract stringent penalties, which are scaring company owners and even prompting directors on their boards to quit.
From small property dealers to directors on boards of realty entities, all can face punishment under the Rera provisions. Players in the sector feel the threats are manifold. Smaller builders fear some clauses might wipe them out.
Developers claim they are working overtime to complete their projects. However, in the face of delay, they hope the government would give them a grace period of anywhere between six months to two years before the retrospective clause is enforced.
“Builders are working overtime and are trying to complete projects. Costs of cement and steel have shot up by one and a half times. A grace period should be given. We have had conversations with officials and government about this,” said Parveen Jain, president, National Real Estate Development Council.
“There is a fear among the developer community that Rera would be enforced retrospectively, is one of the clauses in the notification. If that happens, many would be penalised,” said Santhosh Kumar, operations head at JLL India.
Recently, the building plans of 17 projects from six builders were cancelled by the governing authority in the Greater Noida area. Jaypee Infratech, Gaursons, Orris Group, VGA Developers and Ajnara have all been affected. The Yamuna Expressway Industrial Development Authority had approved the layout plan but its planning department raised some objections in the building plans of these projects, said sources. Since new plans had not come for approval, the Authority cancelled these projects.
Experts believe such cases would be prevented once Rera takes effect. “Such projects would not leave the drawing board itself once Rera is enforced. All these actions are a preamble to the era of Rera. It (the Act) will bring discipline. There is a lack of consumer confidence in the market, caused by such cases,” said Samantak Das, chief economist and national director-research, Knight Frank India.