Govt Urges States To Refrain From Diluting RERA Norms

The Real Estate (Regulation and Development) Act, 2016 (RERA), that came into effect from May 1, 2017, took more than eight years to come in force. Aimed at not only regulating the otherwise unregulated real estate sector, but also to provide transparency and accountability for the stakeholders. Having enforced for over 20 days, RERA is far from resolving the ground situation from consumer’s point of view. Since there is no provision to enforce the RERA norms retrospectively, the various State Governments have come out with their own versions of which on-going projects can be regulated under the RERA laws much to the displeasure of the central government.

For example, in Kerala, old complaints will need to be taken to a consumer forum as the RERA laws will not be responsible for previous issues and complaints registered. The State of Gujarat, which is part of a handful of states to have notified the RERA provisions on May 1, has made it clear that the RERA will not have a retrospective effect. "It will only cover the real estate projects launched after 1st November, 2016," says a real estate expert. As per the central law, ‘ongoing projects’ are defined as those where the development is going on and the completion certification (CC) has not been issued. All such projects will need to be registered under the RERA provisions, the central law says. But States have offered different versions to this basic requirement.

The State of Uttar Pradesh in its notified RERA laws says that all those projects will be excluded from RERA where the services have been handed over to the local authority for maintenance; common facilities have been handed over to Resident Welfare Associations (RWAs); All the development work has been completed and sale/lease deeds of 60 per cent of the apartments/houses/plots have been executed and where the application has been filed with the authority for issue of completion certificate (CC).

Using these provisions, builders having unfinished projects in their portfolio are finding ways and means to escape the impact of RERA in the Delhi NCR and other key real estate hot spots. "States like Madhya Pradesh, Rajasthan, Haryana, Karnataka, Tamil Nadu, Uttar Pradesh, Maharashtra, and Andhra Pradesh have incorporated provisions to give complete relief to incomplete projects. In many instances, builders have already filed applications to obtain completion certificates," says a expert on RERA provisions. But the model law in itself is deficient in finding solutions for the stuck projects. "A large number of builders have extreme cash crunch due to which they can not complete their projects. And the RERA norms do not offer any solution either. Under the norms a builder can be jailed or forced to return money. But it does not offer solution on how to complete the unfinished projects that require funds. There are builders who will go to jail as they dont have any money. How will that help a consumer who is waiting for his flat? And what can a jailed builder do to help? Probably nothing," asks a Noida-based property developer.

According to one report, the authorities like Noida, Greater Noida, Yamuna Expressway, and Huda are waiting to recover around Rs 30,000 crore in dues from developers. Ove 100-odd group housing societies remain "under construction" till date even though the work had started before 2010. These projects are scattered in Noida and adjoining areas and some are in Gurgaon-Dwarka Expressway-Sona-Manesar belt too. Developers in Haryana are taking full advantage of the window provided by the draft state RERA rules to escape the regulatory authority. Till date hundreds of applications have reached the office of the department of town and country planning (DTCP) seeking occupation certificates (OC). The Haryana Real Estate (Regulation and Development) draft rules seeks to exclude projects which have received part completion or occupation certificates. Most of the projects, officials said, for which developers have applied for OC since Friday are incomplete and inhabitable. "Oral instructions have been issued to field staff not to rush in granting OCs," a DTCP official said.

In an effort to assure stakeholders, the central government is reaching out to all state governments urging them not to violate the central RERA norms as at some point in the future, it may have legal impact. In a letter shot to Haryana chief minister M L Khattar, Rao Inderjit Singh, the Union State Minister for Housing said: “It is a settled law that subordinate legislation such as rules, regulations, schemes, etc, cannot be in violation of the provisions of the principal Act, and any such provision inserted in the rules will be open to legal challenge and liable to be struck down by the courts.” This content has been shared with other State Governments too. The housing minister has also urged the states to refrain from re-defining important aspects in the model law like carpet area, ongoing projects, and other terminologies that have adequately been delt with by the central law.