Implementation of RERA across states is nowhere close to its goal: Expert

The numbers say it all.  Only 10 states and five Union Territories (UTs) have so far set up a Real Estate and Appellate Tribunal. Less than two-thirds of all states have a fully functional portal. 

All the provisions of the Real Estate (Regulation and Development) Act, 2016 — an Act to establish real estate regulatory authority — came into force on May 1, 2017. However, even after 15 months, this law is yet to significantly alter the way real estate is transacted across the country.  Dilutions in the Act, in particular, by several state governments, as well as delays in setting up tribunals have affected the effectiveness of the law, say experts. 

Some of these dilutions, which go against the spirit of the model Act, enacted by the Centre, involve changes in the definition of ongoing projects, leaving many of them outside the ambit of the law. 

According to industry players, states like Telangana and Uttar Pradesh have introduced exceptions to dilute the definition of ongoing projects. Even proactive states such as Maharashtra and Karnataka have announced exemptions that exclude several projects from being registered under the Real Estate Regulatory Authority or RERA.

"Dilution in the ongoing project definition has left a huge number of projects out of the RERA ambit, and this is understandably a major concern for buyers,” says Anuj Puri, chairman, ANAROCK Property Consultants.

Experts point out multiple changes by different states in the Act proposed initially by the central government. 

For instance, some states have changed the penalty provisions related to imprisonment of developers. Changes have also been made to the way monetary fines are calculated, liability in cases of structural defects is decided as well as in fees for filing complaints against developers, say experts. 

“Despite the Centre’s vision for RERA, the implementation of the Act across states is nowhere close to its goal,” says Arvind Nandan, executive director-research, Knight Frank India. 

Nandan points out most states and Union Territories have followed a quasi-implementation route which does not amount to the creation of an effective regulator. In some states, the extension of deadlines for project registration is underway. The delay caused in registering projects also restricts the information that can be supplied to consumers through functional portals. At present, only 19 states and UTs have functional portals in place, that too with a lot of information dissymmetry across data points, he adds. 

A closer look reveals that most states have been playing the waiting game on the issue of creating a Permanent Regulator after handing over the reins to “interim” authorities, which was strictly envisaged in the Centre's Act as a stopgap arrangement. According to ANAROCK, only Maharashtra, Karnataka, Gujarat, Rajasthan, Madhya Pradesh and Punjab have fully-operational RERAs. Among these states, Maharashtra seems to be most active. Currently, of the roughly 25,000 projects that have been registered under RERAs across India, more than two-thirds are in Maharashtra alone.

The proactive functioning of the MahaRERA in creating an informative portal, diligent registration of projects and its recent judgments have been successful in restoring buyer sentiment in under-construction projects and addressing intricacies of the construction development process say experts. 

Since its constitution, the MahaRERA has ruled in over 1,000 cases. In some cases, judgments have been delivered within 30 days of complaint filing. 

“By resolving cases on a merit basis, the MahaRERA is able to meet consumers’ expectations of a fast-tracked redressal mechanism and bringing about a change in the attitude of real estate developers towards consumers,” says Nandan. Taking a cue, Karnataka has also started moving in a similar direction with prompt rulings in more than 60 cases, he adds.

Interim regulations are visible in Himachal Pradesh, Uttarakhand, Haryana, Uttar Pradesh, Chhattisgarh, Andhra Pradesh, Karnataka, Tamil Nadu and Bihar. Though still not operational in West Bengal, a committee has been formed to study the Maharashtra and Karnataka model of implementing the Act. Northeastern states such as Mizoram, Manipur, Nagaland, Meghalaya are yet to implement the Act largely because of the complexities of local land laws.