The real estate sector got its most efficient cleansing agent in the form of the Real Estate (Regulation and Development) Act (RERA), 2016, on May 1, 2017. This was expected to be a major step towards decoding the unregulated sector, ensuring transparency and quality and redressing buyer grievances.
RERA was introduced to ensure that consumers' interests are protected and that builders are held responsible. The national regulation provided for tribunals and ombudsmen for redressing disputes. The Act also provided for protection to developers from defaulting buyers and ensured a level of fairness. With proper planning and details of every stage of construction available to buyers, RERA ushered in an era of full disclosure.
However, after nearly two-and-a-half years since RERA was implemented, the response has been mixed.
Implementation in states has been the biggest challenge, mostly due to dilution of various clauses in the Centre's model Act. While many states have notified their rules under RERA, some have not. For instance, Arunachal Pradesh, Meghalaya, Nagaland and Sikkim are yet to do so, mainly due to issues related to land belonging to certain communities. So far, RERA rules have been notified in 23 states and seven union territories. Nineteen states have active online portals.
As per the central RERA, promoters had to register ongoing projects by July 31, 2017, but the registrations are still going on. As on September 14 this year, 44,577 projects were registered.
Maharashtra has stood out as a model case study of RERA, and the state has witnessed signs of uptick in residential sales and overall consumer sentiment. The state accounts for 50 per cent of the total projects registered and 60 per cent of the total real estate agents registered under RERA. Uttar Pradesh, Karnataka, Haryana and Gujarat are the other more active states from a RERA compliance perspective.
In terms of cases disposed, Uttar Pradesh leads the chart, disposing of 10,069 cases as of September 14, 2019, which accounts for 38 per cent of the total cases disposed. Maharashtra comes in a close second with 5,674 case disposals (22 per cent).
RERA has increased transparency in some states but it lacks in leveraging technology to create informative and user-friendly portals for consumers. Many state level RERA portals are yet to make available quarterly updates of developers. Unless the huge amount of data that the state level authorities have collected, is analysed efficiently and made available in interesting formats in public domain, little can be done to bring about a real change or identify problem areas.
Also, due to the slow pace of implementation across the country, a large inventory of real estate projects remains outside RERA purview.
There have been encouraging changes as well. Projects launched after RERA came into existence are doing relatively well and are expected to be completed on time due to improved speed of construction thanks to availability of funds in escrow accounts. Compliance has also been a prominent factor in price rationalisation in the housing segment as it has stopped pre-sales activities and fund diversion during the once popular 'soft launch' stage.
The central government needs to step in and create a platform to address the challenges in different states. The government had announced its intention to set up a common online platform for buyers, developers and RERA authorities for all states and Union Territories, but it remains to be seen how far this helps in addressing the issue of lack of uniformity in laws and capabilities of different RERA authorities.
Nevertheless, the situation is improving, with builders and agents becoming far more accountable. In several instances, developers have had to pay penalty to buyers. Complaint redressal might not be satisfactory for many, but consumers are coming forward to register complaints across states. All in all, with RERA, 'The Wild West' days of real estate are over.
The writer is Chairman and MD of Knight Frank India.