As the Real Estate (Regulation and Development) Act (RERA) completes two years, 99acres.com takes account of its progress in terms of project registrations and complaint resolutions. Also, has the Act been able to live up to its vision of bringing transparency in the real estate industry, which was losing homebuyer's confidence on account of errant builders and delayed possessions.
The Real Estate (Regulation and Development) Act, 2016 (RERA) has turned two today. Arguably, the most contentious law governing the real estate sector in India, RERA aimed at inducing transparency and credibility into the otherwise unorganised sector. Two years on, 99acres.com attempts to analyse whether the Act has met its intended purpose or not.
Noticeably, despite the dilution of laws in a few States, it has been able to earn the faith of the homebuyers. Today, 22 States and 6 Union Territories have their RERA regulations in place. The northeastern States including Sikkim, Manipur, Mizoram, Meghalaya, and Nagaland, too, have given their consent for notifying RERA rules. Of all, 19 States have an active online portal. While West Bengal is the only State to have formulated its own real estate Act, the country-wide progress of RERA is laudable. Here is a progress report card of RERA after two years of its implementation –
The RERA story
The first few months post the implementation of the Act were challenging for the real estate developers as well as the regulators. Amid non-notified rules in most States, minimal infrastructure in place, technical glitches on RERA portals and limited know-how regarding the information requisites to register under RERA, stakeholders remained distraught. New supply diminished by over 16 percent across the country between January and April 2017, YoY, as either the developers failed to register the existing eligible projects or the government failed to catch up the pace of project registrations. Joint Ventures became the norm as small developers struggled to abide with the stringent regulations under RERA, especially the need to maintain an escrow account with 70 percent of a project’s funds. Fly-by-night players were eroded from the market, almost immediately. Homebuyers, although hopeful of a positive environment, remained wary of investing until their States gave clarity over the RERA rules.
Two years later, the long-term effects of a transparent regulatory milieu are evident as property sales have started reporting improvements, buyers are coming out in large numbers and seeking addressal of their grievances and developers are resurging with new projects and cleaner business practices.
The increasing number of RERA registrations
While both the government and the developers took time to adjust to the new regulations under RERA, the two stakeholders adapted over time and picked up the pace of project registrations under the Act. Since the inception, Maharashtra led all States in this regard and today, stands with over 20,700 real estate projects registered with it. Gujarat RERA follows with over 5,100 registered projects. Karnataka and Madhya Pradesh have over 2,500 and 2,100 projects registered with them, respectively. UP RERA has registered over 1,400 projects so far.
The registration of property agents, too, has picked up the pace in the last two years. While Maharashtra has about 19,300 agents registered under MahaRERA, UP has over 2,300 agents with it. A substantial 1,300 agents each have been registered under Karnataka RERA and Punjab RERA as well.
Fast-paced resolution of complaints
One year post the implementation of RERA, it was reported that 75 percent homebuyers were unaware of the Act. They did not know how to check the details of a project under RERA, they were ignorant of their rights under the Act and the protection that the Act could provide. However, the scenario seems to have improved after yet another year. The number of complaints filed under RERA, across States, has gone up invariably, only hinting at the augmenting awareness of the Act. UP RERA, for instance, has reported that the average number of complaints registered in a day has hit 25, forcing the authorities to open a third bench at Noida. The UP RERA Authorities hear about 100-150 cases every day and aim to multiply this number to keep the cases from piling. MahaRERA, too, has been a frontrunner in resolving consumer complains. Of the 6,600 complaints received so far, the authority has been able to dispose of close to 65 percent of them. Haryana RERA and Madhya Pradesh RERA have managed to resolve about 1,700 complaints, each, in the last two years.
According to J C Sharma, Vice Chairman and Managing Director, Sobha Limited, "With the implementation of RERA, consumers’ grievances can now be resolved faster. Additionally, it has enabled the developers to understand their responsibility and work within their competencies. The developers are now increasingly becoming realistic in offering the right products at the right price point. This is facilitating speedy execution of projects and creating a win-win scenario for both developers and homebuyers. Despite the teething problems, the positive impact has been visible over the last two years with enhanced homebuyer sentiments and increasing transparency and accountability in the sector."
The RERA authorities across States are working unabatedly towards making real estate a transparent and profitable venture for investors and homebuyers in India. Looking at the number of cases homebuyers had against fraudulent builders, delayed completions and undelivered homes, it was essential that a regulation be brought in place to protect homebuyers. RERA, ever since its inception, has ensured that homebuyers get a platform which is accountable for rolling out fair judgements in real estate cases. For instance, there have been several landmark rulings by MahaRERA pertaining to revised project deadlines or undelivered projects. UP RERA, too, has come out proactively in protecting homebuyers against delayed projects or insolvent builders. In a one-off, the authority has even taken it upon itself to complete over seven projects stuck in Noida and Greater Noida. Such pro-buyer rulings by RERA authorities across the States have played a major role in changing the face of the real estate industry in the last two years. More such progressive efforts are sure to take the sector a long way – a well-thought-out impact that the government had anticipated while launching RERA.