No Room for De­lay


Business Today - - REAL ESTATE SPECIAL COLUMN - The writer is CEO and Coun­try Head, JLL In­dia BY RAMESH NAIR

The in­tro­duc­tion of the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act (RERA), 2016, is a wa­ter­shed de­vel­op­ment as it has brought the hith­erto un­reg­u­lated sec­tor un­der the reg­u­lated am­bit. For a sec­tor with no prece­dence of a ded­i­cated tri­bunal, it means a sig­nif­i­cant gran­u­lar change at the na­tional and state gov­er­nance level. The aim is to pro­vide trans­parency and or­der to the sec­tor and re­dress griev­ances. Now that RERA is a year old, it is a good time to an­a­lyse how it has shaped the sec­tor.

Let us look at the achieve­ment first. As of April 2018, more than 27,000 projects have been reg­is­tered un­der RERA, in­di­cat­ing that a sig­nif­i­cant num­ber of de­vel­op­ers have ad­hered to the reg­u­la­tions. Reg­is­ter­ing un­der RERA means there is clar­ity on de­liv­er­abil­ity and com­ple­tion time­lines, which is one of the big­gest con­cerns of home­buy­ers. We have seen a rise in de­mand for res­i­den­tial realty in 2017 and it has con­tin­ued into 2018, thanks to RERA. Led by Ma­ha­rash­tra, many states have set up a ro­bust mech­a­nism to im­ple­ment RERA and are also work­ing on rel­e­vant dis­putes.

But there are still many is­sues that need to be worked upon for smoother func­tion­ing. Even af­ter putting forth a dead­line for im­ple­men­ta­tion, there have been de­lays. Un­til now, 27 states out of 28 (it is ap­pli­ca­ble ev­ery­where ex­cept in Jammu & Kash­mir) and all seven Union Ter­ri­to­ries have no­ti­fied the RERA rules. While the north­east­ern states have been slow to set up RERA reg­u­la­tors, states such as West Ben­gal and Ker­ala have come up with their own ver­sions of RERA. More­over, only 14 states have put in place a por­tal for reg­is­tra­tion. It means some state reg­u­la­tors are still invit­ing reg­is­tra­tion via a cum­ber­some man­ual process, de­lay­ing the pro­ce­dure. The slow pace of var­i­ous state ap­provals is a mat­ter of con­cern that may need to be ad­dressed soon. If not rec­ti­fied ur­gently, the cur­rent dis­par­ity in RERA im­ple­men­ta­tion may lead to lop­sided de­vel­op­ment with in­vest­ments favour­ing only a few states with stronger reg­u­la­tion.

Our find­ings and in­ter­ac­tions with some lead­ing state reg­u­la­tors, (as stated in a re­port ti­tled Ma­haRERA Data De­mys­ti­fied) re­veal that real es­tate firms have been sub­mit­ting ex­tended time­lines to evade mar­ket fac­tors that may de­lay con­struc­tion. State reg­u­la­tors have given them the op­tion to rec­tify such time­lines, but de­vel­op­ers must men­tion re­al­is­tic, achiev­able tar­gets in the first place to en­sure com­pli­ance. More­over, home­buy­ers com­ing for fresh book­ings may not con­sider projects with ex­tended time­lines.

No commentary on RERA will be com­plete with­out cit­ing its suc­cess in Ma­ha­rash­tra. The state has taken mea­sures to pro­tect con­sumer in­ter­ests and it is now in­volved in set­tling dis­putes be­tween de­vel­op­ers and buy­ers. Ag­grieved home­buy­ers in the state can ap­proach the con­cil­i­a­tion fo­rum formed by the Ma­ha­rash­tra Real Es­tate Reg­u­la­tory Au­thor­ity (Ma­haRERA). The fo­rum in­cludes rep­re­sen­ta­tives of Ma­ha­rash­tra Builders’ As­so­ci­a­tion and con­sumer ac­tivists who me­di­ate to en­sure a quick res­o­lu­tion. In a re­cent de­vel­op­ment, it has up­loaded geo-co­or­di­nates of reg­is­tered projects on its por­tal to help buy­ers find the ex­act lo­ca­tion of the projects and as­sess their neigh­bour­hoods. The au­thor­ity has also pe­nalised de­fault­ers, be they de­vel­op­ers, buy­ers or real es­tate pro­fes­sion­als, en­sur­ing that every stake­holder com­plies with the Act. As of March 2018, about 1,400 com­plaints were reg­is­tered and over 500 were re­solved, and over 17,000 projects were reg­is­tered un­der Ma­haRERA.

Un­doubt­edly, RERA is re­quired to cre­ate the much-needed trans­parency in the real es­tate sec­tor. In our bi­en­nial re­port on Global Real Es­tate Trans­parency In­dex, In­dia has gone up five places in rank­ing in 2018 as against 2014 – a di­rect re­sult of the pol­icy changes and en­force­ment of poli­cies such as RERA, GST, Be­nami Trans­ac­tions (Pro­hi­bi­tion) Amend­ment Act and Bank­ruptcy and In­sol­vency Act.

A trans­par­ent sec­tor will at­tract in­vest­ments from in­sti­tu­tions and in­di­vid­u­als and con­trib­ute to the coun­try’s eco­nomic growth.

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