Relief for buyers, but real estate act needs more teeth
Recently, various state real estate regulatory authorities have seen some definitive action in defence of the hapless home buyer. In Maharashtra, the MahaRERA has issued show-cause notices to as many as 313 big promoters after an external auditor found that the expenditure claimed by these builders did not match the progress on the ground. The MahaRERA will investigate whether funds raised for the projects have been diverted elsewhere. Similarly, the Haryana RERA has issued an order freezing the bank accounts of three mass housing projects of Ocean Seven Buildtech (OSB). Residential real estate across the country continues to be a minefield where even branded developers cheat thousands of consumers of their hard-earned money. It is, therefore, commendable that regulators are taking proactive action. This will also hopefully serve as a deterrent to wannabe crooks.
To end the law of the jungle, the Real Estate (Regulation and Development) Act, 2016 was enforced from May 1, 2017. Builders were required to register their projects with a timeline of delivery. Layers of penalties were built in case builders defaulted on timely delivery or product quality. Tribunals set up by the Authority also provide a forum for resolving complaints.
The problem, however, has been one of uneven implementation. Since housing is a state subject, each state government had to notify its rules under the central act and set up a provincial regulatory authority. While Maharashtra RERA has done well, registered nearly 40,000 projects, and disposed of about 70% of the nearly 18,000 complaints received, others have not been so proactive.
With five years’ hindsight, the RERA regulators have played a positive role. But it is still a work in progress. Registration and display of project details on the RERA website have brought much-needed transparency. Though still rudimentary, home buyers now have a forum to resolve disputes. However, there is a long way to go. One, the structure and manning levels of the various state RERA authorities need to be beefed up to monitor projects better. These bodies are woefully understaffed and cannot investigate many complaints. Second, while RERA tribunals have the power to impose fines and order compensation in the case of failed projects, they need more legal teeth to implement their own orders. Otherwise, even after years of litigation, builders will defy RERA orders brazenly.