India's first effort at regulating the real estate industry might face uneven implementation, say state authorities.
The new housing law, Real Estate (Regulation and Development) Act 2016 (RERA), came into force on May 1. RERA attempts to discipline real estate developers, arm consumers with more rights and mandates states to set up a local regulatory authority to address industry concerns. Only 14 states have implemented the new law so far, and there have been concerns that rules have been diluted, taking away the essence of the central Act meant for benefiting consumers.
Local situation in a state should be considered when RERA is being implemented as real estate markets are different, Anthony De Sa, Madhya Pradesh RERA chairman and former chief secretary of the state, told BloombergQuint. There cannot be uniformity in implementation of the Act, he said on the sidelines of a seminar on RERA, GST (goods and services tax) and affordable housing.
Vini Mahajan, additional chief secretary, Housing Urban Development, Punjab, told BloombergQuint that the state is not comfortable with some provisions in the Act.
...Under the rules, it appears that no extension to a project beyond a period of one year can be given for any reason whatsoever. There could perhaps be situations where such an extension is needed if the project cannot be completed within a year. The Act is not clear on what consequences will follow.Vini Mahajan, Additional Chief Secretary-Housing Urban Development, Punjab
Mahajan said that Punjab has prepared the draft rules, which will be approved by the Chief Minister soon and notified a month after that.
Anil Sharma, chief legal adviser to the Delhi Development Authority, however, said that there is sufficient flexibility in the Act for implementation. “It is for the regulator to see how they frame the rules,” he said.
Also read: RERA Set To Empower Homebuyers
According to a CRISIL report, crucial aspects of the Act, such as the definition of the term “ongoing projects”, penalties for non-compliance, payment schedule and clause for structural defects have either been weakened or inadequately emphasised by states.
For instance Haryana has decided to allow developers more compliance time than envisaged in RERA.
Haryana will allow developers to sell ongoing projects during the first three months in which they ought to have registered the project.Dilbag Singh Sihag, Member, RERA Committee, Haryana
Sihag, member of Haryana's RERA Committee and chief town planner, said that in Haryana's case, a large segment of projects are those which are going to complete in a month or two, he said.
Developers in the state are not only government agencies like Haryana Urban Development Authority (HUDA), HSIIDC, Housing Board, but more than 1,600 private colonisers, he added.
RERA rules are expected to be notified in Haryana next month, he said.
Also read: Five Ways RERA Will Impact Real Estate Brokers
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