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Lessons learnt over two years of RERA’s implementation

June 2019
It’s been three years since the Central Real Estate (Regulation and Development) Act was announced by the Government, and two years since the deployment of the regulatory authority in India. Let’s take a look at how the country has been performing.

Status of states
As in April 2019, 22 states and six Union Territories have notified their RERA rules. Of these, 19 states have fully operational RERA with active online portals. Close to 35,000 projects and over 27,000 agents have been registered with RERA, pan-India, so far.

Maharashtra leads with 20,718 project registrations and about 19,699 RERA-registered real-estate agents, according to Anarock Property Consultants. Gujarat follows with 5,317 registered projects and 899 registered agents and agencies. Project registration in Karnataka currently stands at 2,530 projects and 1,342 RERA-registered real estate agents. The northeast states of Manipur, Meghalaya, Mizoram, Nagaland and Sikkim—which had earlier shied away from RERA—have also agreed to officially notify its rules soon. West Bengal has not aligned with the Central Act but has its own regulatory authority for the state: West Bengal Housing Industry Regulatory Authority (WBHIRA).

The Maharashtra model
Maharashtra has undoubtedly been a successful example, especially because it was the first in the country to have a proper system in place. “Maharashtra should be a model for all states to follow suit,” says Samantak Das, Chief Economist and Head of Research & REIS, JLL India. “The way MahaRERA is handling cases, it is probably the only one to have a conciliation body. Disputes have been settled in weeks and not in years! A conciliation body for faster resolution and adjudication of cases by regulatory authorities before referring to NCLT is important in terms of lessons learnt. States should follow suit in terms of timeliness and data. MahaRERA is also looking to map information with GIS.”

Notification of the rules is the most basic step, with the website being of utmost importance. Here again, Das says, “The MahaRERA website, in the click, provides the entire information, not only the project name but the stage of construction it is in, how much is sold, etc. This gives buyers a fantastic opportunity to evaluate before buying.”

Addressing grievances
Haryana and Kerala authorities have come down heavily on defaulters just like Maharashtra, says Girish Bindal, Head, Content & Research, PropTiger. “And Uttar Pradesh has come up with multiple benches to address the volume of grievances.”

Notably, MahaRERA has received as many as 6,631 complaints (as in April) since inception, of which the state authority claims to have disposed of more than 64 per cent, as per information from Anarock. In several instances, developers have been reprimanded by concerned authorities and have had to pay penalty amounts to their buyers. However, there are also cases wherein despite RERA notifications to defaulting builders who have been summoned to pay penalty to buyers, they are delaying payments or not attending hearings.

The challenges   
The huge volume of developers and projects and time taken for verification are some challenges faced by states, according to Bindal. “Also, there is a resource crunch, where grievance redressal was meant to be quick but lack of manpower has led to delays in addressing the problems of buyers,” he highlights, adding that RERA authorities are also dealing with issues with respect to the implementation of their decision. Buyers often move to NCDRC, which creates confusion as to whose verdict to adhere to.

While RERA is effective when it comes to new projects, Samir Jasuja, Managing Director & Founder, PropEquity, still considers it as a toothless tiger for old projects. “RERA also lacks effective infrastructure,” he adds. “There is no team on ground who would audit or validate the data provided by developers. Some sales numbers reported on the RERA website are incorrect and there is no proper mechanism to crosscheck it.”

Here, Das makes an interesting point: “RERA across the country so far has 15 regular regulators and 13 interim regulators. My understanding of interim is that the regulator will have additional charges. So in these cases, real-estate regulation is given to a person who has other duties as well, this being additional. The way real estate is performing, it needs full attention. You cannot have an interim. The interim permission was given in the Central Act as elbow room to states to initiate the appointment of a regulator, but it has been fully implemented to bring in a permanent regulator.”

Areas to be addressed
It is three years since the government announced RERA. But we are still falling short on certain aspects. Das points to one: “Take, for example, the registration of projects; as per RERA data, Maharashtra accounts for nearly 50 per cent. The state accounts for about 18,000-19,000 projects from the 37,000 projects registered. This shows that the registration pace is not so good in other states, except in Maharashtra.”

Speaking about lessons learnt, Das cites training programmes for stakeholders and agents as important. “Besides, establishing a complete fast-track approval, single-window system is crucial. This, along with the speed in which disputes are settled and the way technology is upgraded.” He adds: “If you don’t have a powerful operational transparent website disseminating information, what is the use of this information?”

Further, Bindal highlights the areas that need to be addressed:

  • Quick set-up of RERA portals for the convenience of developers, agents and buyers.
  • RERA authorities need to be given ‘real’ powers. As of now, there is no system in place to ensure verdicts are implemented and adhered to.
  • This makes RERA a toothless tiger.
  • Manpower in RERA offices to address the huge volume of complaints that come up every day.
  • Addressing the complaint of developers of high cost of permissions.

Undoubtedly, RERA is a system that helps not just buyers but developers to sell their inventory. The market sentiment is clear: Buyers are looking for registered projects. And while states that haven't yet aligned with RERA will have a tough time encouraging buyers to invest, it is yet to see if RERA will help the residential sector revive its lost traction.

RERA registered projects and agents across states (as in April 2018)
Rules and authorities notified: Bihar; Uttarakhand; Maharashtra; Madhya Pradesh; Karnataka; Kerala; Odisha; Himachal Pradesh; Punjab; Tamil Nadu; Goa; Delhi
Rules notified: Andhra Pradesh; Gujarat; Rajasthan; Uttar Pradesh; Haryana; Assam; Chhattisgarh; Andaman & Nicobar; Chandigarh; Dadra & Nagar; Daman & Diu; Lakshadweep; Puducherry
RERA authority notified: Jharkhand
Rules drafted not notified: West Bengal
Under progress: Sikkim; Meghalaya; Manipur; Mizoram; Tripura; Telangana; Arunachal Pradesh; Nagaland Source: PropTiger

- SERAPHINA D’SOUZA