BENGALURU: The Real Estate (Regulation and Development) Act has been passed in the state. The purpose of the law is to make sure that funding of real estate projects is from legitimate sources, and fully provisioned by builders before they take up projects. This, in turn, will protect home buyers from being left high and dry when promises made to them are either not kept or delayed.
In passing the law, however, the government has excluded projects that are 60 percent complete from its ambit. It is not clear why. If a project is inordinately delayed, or if there has been a deliberate breach of trust by a developer, then customers in such projects need protection. The fact that some portion of a project is complete does not take away the need for the rest of it too to be completed as promised.
The law also provides for a regulatory authority to be established by the state for the sector. It will be critical to establish a strong regulator to ensure that the provisions of the law to protect buyers are enforced. In too many sectors, governments have diluted potentially strong institutions by setting up weak provisions for their work, and this has defeated the intent of the laws themselves. RERA, one hopes, will not suffer that fate.
At the same time, there are concerns that builders have raised that certain provisions of the law are impractical in the sector, and sound regulation is important to be alert to these too. Laws and regulation can sometimes have the perverse effect of suffocating the availability of goods and services to the public, and we surely don’t want that. The shortage of housing in the country is already great, and we cannot afford to worsen that situation.
As one of the fastest growing cities in the world, Bengaluru is a good testing ground for the effectiveness of the RERA. Making it work well here can help establish a model for many other cities.