OUTLOOK OUTLOOK
OBSCURITIES ARE THERE BUT ...
Industry experts say that theRERA is currently in its teething stage and with time it would evolve and result in a mature and transparent real estate sector in our country
BY CHROMOHOMES BUREAU
Undoubtedly , the Real Estate ( Regulation and Development ) Bill , popularly known as RERA , has been envisaged as a landmark reform for the real estate sector . But as of now owing to being in its teething stage , industry experts believe that it would evolve with time . However , there are some ambiguities under RERA which many feel should be revisited in order to protect the interest of the industry which is the second largest contributor to GDP and supports millions of jobs . “ While RERA is a key reform to regulate the real estate sector , it does have its set of ambiguities , which has resulted in the dilution of the Act by different state governments ,” says Sachin Sandhir , global managing director - emerging business , RICS South Asia .
In many states , as he looks at , the formal authority ( Real Estate Regulatory Authority ), which will implement the rules and regulations of the Act , has not been constituted . “ This has left developers high and dry because they cannot launch a project , without getting it approved and they still do not know who to go to . It is not clear who would be held liable for a developer ’ s loss of revenue on account of absence of such an authority ,” adds Sandhir .
Experts are of the view that public authorities such as development authorities , housing boards etc . are within the ambit of this law since the term ‘ promoter ’ includes such authorities as well . But , according to them , there is no indication that these public authorities – which also develop real estate – have come up with a new compliance framework under this law .
The RERA has been diluted by many states regarding the inclusion of ongoing projects . Several states have notified RERA rules but kept many ongoing projects out of the ambit of the Act even though the occupancy certificate had not been received for those projects .
Here are few ambiguities which need to be revisited in the current reform to strengthen RERA ’ s implementation .
• Even after the July 31 deadline , 13 states are
yet to notify their RERA guidelines .
• Developers are supposed to put 70 per cent
of the project funds in a separate account and these funds can only be used for the specific project . It applies well to new projects , but what about projects which are already under construction and developers have already used funds elsewhere ?
• As per RERA , developers are prohibited from
marketing or selling unregistered projects . There is no clarity on sold out projects which are yet to receive a completion certificate and grant possession to home owners . Do such projects need to be registered and would the builder be responsible for structural flaws and other forms of maintenance for next few years ?
• RERA mostly focuses on the way forward but
doesn ’ t cater to existing buyers of ongoing projects . It is not clear if existing allottees will have to sign new contracts with developers or will they not fall under RERA .
• Many times projects get delayed because of
delay in approvals . Authorities responsible for project approvals should also come under the purview of RERA .
Source : Ganesh Vasudevan , CEO , India Property . com
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