(An article on issues in implementation on RERA by states)
Real Estate( Regulation & Development ) Act, 2016 or as simply called RERA is an important piece of reform legislation and it should be greatly appreciated that government is keen in implementation of it from May1st ,2017. As was emphasised by Shri Rajiv Ranjan Mishra, joint secretary, ministry of housing and urban poverty alleviation at the two-day national review and consultation meet organised in Delhi on the Pradhan Mantri Awas Yojna (Urban), in all likely hood one will have a fully implemented RERA in place this year.
However, there seems stiff resistance at State level in implementation of the RERA . States with larger Real Estate stake seem still in a bind to either dilute or defer. RERA as it is today is a stringent law and is skewed toward customers.In fact , in terms of RERA Act ,all the states were required to notifyRules including agreement for sale rules by October 2016 and establish the Real Estate Regulatory Authority and the appellate tribunals by April 30, 2017.However, only four states of Gujarat, Madhya Pradesh, Maharashtra, Uttar Pradesh and six Union Territories have notified the final rules so far. Further, as quoted ,the government had also warned states of a serious situation of vacuum arising if necessary institutional mechanisms for the real estate regulatory Act were not put in place before the deadline of May 1 this year. Maharashtra had finalised its Rules but has to yet notified , similarly States like Tamilnadu , Rajasthan, Punjab have come out with draft rules but are yet to notify. Apart this there is already a great deal of debate on the notified Rules of UP. Now, with this latest salvo, States seem to have no room left.
It is but natural that whenever there is a change , there is bound to be resistance. RERA will bring in a change in the way real estate industry will function. Under the Act , every project launch will constitute a fresh offering ( like securities offering ) and requires a gamut of disclosures.All the debate is not as much on the new projects as it is on the 'ongoing projects'. The disclosures and fund discipline to be adhered to on the ongoing projects coupled with current stress in the industry is the pain point of developers. To be fair to developers , RERA does have various issues that need clarity, for example the ground reality in the case of issuance / obtaining the 'completion certificate' for projects is completely different, another area is acknowledging the delay in projects and probably the most painful area is that of depositing monies collected till date and not utilised on the project into a separate account within 3 months of the specific date.This is enforcing a discipline with retrospective effect on the developers.
All in all, one can not deny the reformative nature of the legislation and with so much of chaos in the industry, some order is need of the hour. RERA will weed out lot of dead wood and promote healthy business.
Mr.Venket Rao, Founder & Chief Executive of Intygrat Business Advisory (P) Ltd has over two decades of rich experience in the areas of management, finance, regulatory compliances, secretarial & legal. Over the years, Mr.Rao occupied senior management positions in industry and spent over a decade in Real Estate Industry and is widely popular in real estate circles. He is a Graduate in Arts (English Hons ) from Madras University, Chennai, Associate Company Secretary from ICSI,New Delhi, holds Post Graduate Diploma in International Business from Indian Institute of Foreign Trade (IIFT) and Licentiate of Insurance from Insurance Institute of India, Pune. He has served as Member of the Managing Committee of PHD Chamber of Commerce & Industry and as Director with Delhi Stock Exchange. He was on various committees of PHD Chambers & Delhi Stock Exchange .He has been on various panel discussions on Real Estate & Capital Markets.He is currently member of Capital Markets Committee of PHD Chambers.
The views and opinions expressed in this article are of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author– and, since we are critically-thinking human beings, these views are al-ways subject to change, revision, and rethinking at any time.
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