Pro-Builder Norms in Maharashtra Realty Law Likely to Be Discarded
The Real Estate Regulation and Development Act was introduced to help the common man. Its primary goal is to bring tighter regulations into the system, thereby bringing transparency and accountability to the whole home-ownership experience. The Act applies to both residential and commercial real estate projects. It aims to provide safeguards against delays and fraudulent practices, and to impose various disciplinary measures to protect consumers’ interests.
The basic principles and vision for this Act was drafted by the centre, with each of the states to individually set up a Real Estate Regulatory Authority (RERA), an appellate tribunal and RERA rules.
One of the most controversial has perhaps been the Maharashtra Real Estate (Regulation & Development) Act 2016 (RERA). It has been argued that there is a vast difference between the rules framed by the centre and those framed by the state. Most of the clauses in the state rules were found to be anticonsumer. That defeated the main objective of the Act, which was to bring transparency in the real estate business and protect consumers’ interests.
Many housing experts and groups who fight for consumer rights, such as Mumbai Grahak Panchayat, have accused the state government of diluting the provisions of the Act and making it more like an anticonsumer act. Mumbai Grahak Panchayat opposed the RERA rules formed by the state government on the ground that they were not only pro-developers but also in clear violation of consumers’ rights. They demanded immediate withdrawal of the proposed rules. The objections they raised are summarised below: • The old state law had permitted the builder to cancel the agreement after giving a 15 days’ notice, and he could resell the flat only after refunding money to the original buyer. However, under the new draft rules, a builder can immediately sell the flat after terminating the agreement. • As per the new draft rules, a buyer must pay 30 per cent of the total cost while signing the agreement, and 45 per cent when the plinth of the building is constructed, whereas the earlier state law stipulated 20 per cent payment when the agreement was signed with the developer. The centre’s rules do not stipulate any payment schedule; it left it to the states to formulate it. • The new state draft says builders can pay Re 1 per square metre for the registration fee, which means for a 100,000 square feet project he has to pay approximately Rs 10,000. However, the central rules prescribe a fee of between Rs 5 lakh and Rs 10 lakh for residential and commercial projects. • Central rules propose a fee of Rs 1,000 for filing complaints before housing authority, whereas the state draft has proposed to increase this fee to Rs 10,000. • The central rule requires a builder to submit an annual report including profit-and-loss account, balance sheet, cash-flow statement, directors’ report and auditors’ report for the preceding three financial years, among other things. However, the new state rule is silent on such a requirement.
This clearly shows that the state’s draft RERA rules are biased towards the builder and run contrary to the very essence of the Act, where the buyer is supposed to be king. The clauses pointed out by Mumbai Grahak Panchayat suggest that the state is more concerned about safeguarding the interests of real estate developers.
Government sources claim that most of the objections and suggestions submitted by Mumbai Grahak Panchayat have been incorporated in the revised rules and await the chief minister’s approval. Hopefully, the new state law has all the provisions that are in favour of flat buyers so that they can have a regulatory body under which easy and fast recourse is available.