RERA off to a rocky start in Na­tional Cap­i­tal Re­gion

HT Estates - - FRONT PAGE - Ro­han Sharma feed­ Ro­han Sharma is as­so­ciate di­rec­tor, re­search & REIS, JLL In­dia

RERA - the lat­est ‘Wun­derkind’ in the In­dian real es­tate in­dus­try – has had a dif­fi­cult birth and seems to be hav­ing a trou­bled child­hood. The ex­pec­ta­tions from the ‘mir­a­cle child’ seem to be mired in a ‘what’s changed?’ feel­ing. State Gov­ern­ments ap­pear obliv­i­ous to the rea­sons for bring­ing in such arev­o­lu­tion­ary piece of leg­is­la­tion in the first place.


One of the main prob­lems is that dif­fer­ent States have in­ter­preted and en­acted their own ver­sions of the cen­tral RERA. Nowhere is this prob­lem more man­i­fest than the al­ready no­to­ri­ous NCR res­i­den­tial mar­kets.

NCR has for long been the largest mar­ket in terms of ab­so­lute vol­umes of launches as well as sales. Its share for both PanIn­dia launches and sales dur­ing 2010-2013 was 45% re­spec­tively. Dur­ing 2014-’15, NCR’s res­i­den­tial project launches contributed a 33.0% share to Pan-In­dia new units sup­ply, while cor­re­spond­ing con­tri­bu­tion to sales was28% dur­ing this pe­riod. It is only over the last 18 months that NCR’s share to launches and sales has de­clined to 10% and 20% re­spec­tively.

How­ever, the col­lu­sion of some un­scrupu­lous de­vel­op­ers and the au­thor­i­ties has led to ma­jor con­cerns for buy­ers – by far the most af­fected stake­hold­ers – who jus­ti­fi­ably be­lieved that RERA’s en­act­ment would give them a stronger voice and ad­dress all their grievances. Yet again, though, home­buy­ers in NCR seem to have been short­changed.

RERA came about pri­mar­ily due to the prob­lems be­ing faced by ex­ist­ing buy­ers. There­fore, it stands to rea­son that the Act should first seek to ad­dress ex­ist­ing buy­ers’ con­cerns and also cre­ate a tem­plate for apro­tec­tion mech­a­nism for new buy­ers. It is here that the States, par­tic­u­larly Ut­tar Pradesh and Haryana, have let down the buy­ers.

While fin­ger-point­ing will not re­solve mat­ters, some dis­cus­sion on why these States have di­luted RERA’s main pro­vi­sion - the def­i­ni­tion of ‘on­go­ing projects’; or, in other words, the sec- tion that per­tains to the cov­er­age of the Act.

Con­sider this…

The Cen­tral Act de­fined on­go­ing projects as those which have not yet re­ceived their com­ple­tion cer­tifi­cates. The op­er­a­tive term is ‘com­ple­tion cer­tifi­cate’ – a vi­tal doc­u­ment which cer­ti­fies that apro­ject has been­de­vel­oped ac­cord­ing to the sanc­tioned plan, in­clud­ing lay­out and spec­i­fi­ca­tions, as ap­proved by the com­pe­tent au­thor­ity un­der the lo­cal laws. It is far more rel­e­vant than the oc­cu­pancy cer­tifi­cate, which merely cer­ti­fies that a project or its phase is fit for habi­ta­tion with ba­sic in­fra­struc­ture such as elec­tric­ity, wa­ter and san­i­ta­tion.

Both Ut­tar Pradesh and Haryana have adopted a def­i­ni­tion that is more ex­clu­sion­ary than in­clu­sive in na­ture. In both States, all on­go­ing projects which have com­pleted de­vel­op­ments works and have ap­plied for com­ple­tion cer­tifi­cates are cur­rently ex­cluded from RERA cov­er­age, un­less their ap­pli­ca­tions are re­jected. In fact, UP has ex­empted projects where 60% of sale deeds have been ex­e­cuted, while Haryana has ex­empted projects with even par­tial com­ple­tion / oc­cu­pancy cer­tifi­cates.

In sim­ple words, this means that projects with mul­ti­ple tow­ers of which some have been com­pleted but project- level ameni­ties are not yet in place or are de­layed - and where even pos­ses­sion was de­layed - are out of the purview of RERA.


A spate of de­vel­op­ers had ap­plied for com­ple­tion cer­tifi­cates be­tween Oc­to­ber and Novem­ber 2016 and re­ceived them over the sub­se­quent months. This is vouch­safed by the fact that over 21,000 apart­ment units were com­pleted in Noida and Ghaziabad over the past six months and an­other 7,500 were­com­pleted in Gur­gaon – many in projects where com­mon fa­cil­i­ties were not fully com­pleted and handed over to the re­spec­tive RWAs (Res­i­dent Wel­fare As­so­ci­a­tions).

For a res­i­den­tial mar­ket which has one of the worst track records for com­ple­tion time­lines and been the venue of in­nu­mer­able con­sumer dis­putes on qual­ity, un­ful­filled prom­ises and de­lays, this is an­other missed op­por­tu­nity for the NCR real es­tate mar­ket to set the record straight.

Un­for­tu­nately, the dis­re­pute that the NCR real es­tate mar­ket has earned it­self has led to ev­ery­one be­ing tarred by the same brush in public per­cep­tion. While no one dis­putes that there are some bad ap­ples in the real es­tate de­vel­oper in­dus­try, this does not negate the fact that there are also highly re­puted and very cred­i­ble play­ers who have cre­ated a dis­tinc­tive brand on the back of qual­ity, ac­count­abil­ity, cus­tomer-cen­tric­ity and fair busi­ness prac­tices.

This fact also brings with it a re­al­ity about RERA that bears men­tion­ing. While the whole premise of RERA is to give af­fected buy­ers a fo­rum to air and seek re­dres­sal of their grievances, not every con­sumer com­plaint will re­sult in an un­favourable judge­ment against gen­uine de­vel­op­ment com­pa­nies whose projects have been de­layed be­cause of un­fore­seen cir­cum­stances be­yond their con­trol. For all con­sumer com­plaints, the rel­e­vant RERA tri­bunal will weigh the facts of the case and give due heed to gen­uine is­sues of such de­vel­op­ers; for in­stance, un­due de­lay by the com­pe­tent au­thor­i­ties to is­sue per­mis­sions and ap­provals for the project, or other bu­reau­cratic road­blocks.


NCR has for long been the largest mar­ket in terms of ab­so­lute vol­umes of launches as well as sales

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