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How States Are Undermining RERA; Some Dilute It, Others Totally Ignore It

The RERA is an attempt to create a level playing field for homebuyers by creating transparent and accountable mechanisms in the real estate sector, which was seen as being heavily tilted in favour of realty firms.

Tushar Dhara | News18.com

Updated:July 31, 2017, 1:50 PM IST
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How States Are Undermining RERA; Some Dilute It, Others Totally Ignore It
Picture for Representation. (Photo: Reuters)
New Delhi: Today is the deadline for real estate developers across India to register with their states’ regulators under the Real Estate (Regulation and Development) Act, which was passed by Parliament in May this year.

The RERA is an attempt to create a level playing field for homebuyers by creating transparent and accountable mechanisms in the real estate sector, which was seen as being heavily tilted in favour of realty firms. But what is the status of RERA now? Here is a News18 explainer.

How does RERA help home buyers?

Home buyers have the rights to access real estate project details pertaining to costs (land, construction), property and development, project completion time and more because the information will be made available on each state’s RERA website. These details were often opaque and buyers had no idea what they had signed up for and the aim of RERA was to put information in the public domain to introduce transparency.

What are the benefits for buyers?

- Developers cannot make changes in the approved plans of a project without the approval of two thirds of allottees.

- Penalties can be levied on developers for project delays.

- Firms liable for structural defects and have to make changes to housing units with flaws free of charge.

- Developers cannot introduce third party firms to take over the project without the consent of the allottees.

How would real estate firms make the disclosures?

All realty firms were supposed to register with their states’ RERA authority by July 31, three months after the Act was cleared by Parliament.

Unless they register, developers cannot advertise, market or sell housing units. Those who do not register are liable to penalties of up to 10% of the project cost. Continued violation could also lead to imprisonment.

So what is the state of RERA in the States?

Ironically, only a handful of states have done their bit to implement RERA. Only Kerala, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, Karnataka, Punjab and Uttar Pradesh have created RERA websites for developers to register. UP’s website went live on July 26 and within a day received 15,000 complaints from homebuyers, despite a Rs. 1,000 fee per complaint!

Only 15 states have notified the final rules, while the remaining are in different stages of implementing them. This undermines the very purpose of RERA.

What about states which don’t have the required mechanism in place?

The Central government has refused to extend the July 31 deadline, but states which have made no head way, like Goa, have granted an extension till October 31 for developers to register their ongoing projects. The state has not yet notified the rules.

What are other concerns?

Haryana and UP have diluted the definition of projects that require a completion certificate. According to the original RERA rules, any project that does not have such a document, essentially certifying that a real estate project met all the legal norms, buyers have the right to seek redress. The two states have changed the norms of projects requiring such certificates in such a way to exclude a majority for the legal requirements of RERA.

Homebuyers in Noida-Greater Noida and Gurgaon have protested the dilution in the rules as it leaves them at the mercy of developers, something that RERA sought to address.
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