RERA relief eludes property buyers

Vinod Behl

Last summer when Real Estate (Regulation & Development Act) 2016 was implemented finally, everyone hoped that after the initial teething problems, things will start falling in place for the harried home buyers. However, more than a year has passed and the report from the ‘ground zero’ is not heartening enough as relief seems to be eluding the aggrieved customers.  The promised impact of this landmark pro-consumer Act is far from evident. Though property buyers have reposed their trust  in the Act and the pro-active stance of the authorities and the judiciary has seen some action against unscrupulous developers,  yet such instances are very few.

States lose the plot

Even after a year the implementation of the Act by states has been painfully slow. The state RERA authorities have proven to be laggards in project registration, which is their key function. Data compiled recently by global property consultancy Anarock Property Consultants reveals this poor show on the part of states. For example in Haryana only 481 projects have been registered so far, while in Punjab, Uttarakhand and Himachal Pradesh, these  numbers are 602, 200 and 23 , respectively. In states like Delhi, Jharkhand, Orissa  and Telangana, too, the project registration figures stand at 18, 30, 215 and 30, respectively. These numbers show the absymally low registration of projects under RERA. Thus, it goes without saying that if only a handful of projects are registered under RERA, then the number of home buyers benefitting from the new law will be negligible. The numbers in states like Gujarat,  Karnataka, Madhya Pradesh, Uttarakhand, are still respectable at 4,076,  2,133, 2,019, 2,517. Maharashtra has taken the lead with the registration of 18,492 projects.

Complaint redressal is slow

Besides tardy project registration, the redressal of complaints by the state RERA authorities also leaves much to be desired. According to a  recent  survey by property portal magicbricks.com, in Uttar  Pradesh, there was a backlog of 8,100 complaints (mostly in Noida, Greater Noida and Ghaziabad) and UPRERA Regulator expects that all pending complaints would be addressed by January, 2019.  One of the  major reasons for slow disposal of cases is that RERA authorities are  not devoting enough time to hear cases. In Gurugram, the RERA Authority,  which was earlier working three days a week, has now extended it to five days a week to tackle the backlog of cases. State regulators have not been redressing consumers’ complaints in a time-bound (60 days) manner. In many cases, the  timelines have stretched to six months and more.  Madhya Pradesh RERA  Authority, according to its Regulator, Anthony de Sa, is working overtime to ensure that all complaints have the first hearing within 30 days.

Lack of clarity over refund

The main redressal sought by property buyers in terms of refund, compensation and delivery of homes is eluding them. Many state RERA  authorities  are preferring project completion over refund. Like the Gurugram bench of Haryana Real Estate Regulation Authority (HARERA) is not giving refund in cases where a project is more than 40 per cent complete, to protect the interest of larger number of consumers. The front runner in RERA implementation — Maharashtra is also focusing on project delivery. Gautam Chatterjee, Chairman, Maharashtra RERA, says “Our first priority is  to push defaulting developers to complete projects within a reasonable time frame to protect the interests of buyers”. Many states like Haryana have yet not constituted Adjudicating Authority and as such  the cases of compensation can not be taken up. With regard to the completion of delayed/stalled projects (especially those in advanced stage of construction), neither state RERA Authorities nor the  government and industry bodies have done anything. 

One  hopes that over the coming months state RERA authorities will become  stronger and  more efficient in redressing the grievances of property buyers, thereby living up to the consumers trust in them.

Dilution of rules

What has  made the matters worse  is that despite the warnings of the Housing Ministry, some states have diluted Central RERA rules, with regard to the ongoing projects, penalty for compounding offences,  definition of common areas and increasing timelines for delivery of  projects. Recently, Housing & Urban Affairs Minister, Hardeep Singh Puri, told states of Haryana, Punjab, Uttar Pradesh, to take  suitable action to ensure that their rules are in line with the model RERA Act of the Centre, warning that those diluting the rules will  face harsh consequences.

Regarding tweaking  of rules, a Gurugram-based NGO Manav Awaaj has  alleged that majority of the developers in the city , in connivance  with the District Town & Country Planning (DTCP) officials  had  fraudulently applied and received OCs and Part OCs in 2017 before the publication of HARERA notification, for their incomplete projects in  order to avoid registration of their projects under HARERA and to cheat home buyers. Builders had  sought the OCs from obliging DTCP  officials in a deceitful manner though their work was still pending. This was done so that buyers were not able to approach HARERA for redressal. 

Meanwhile, HARERA’s  Gurugram bench, in a recent landmark judgement, has attempted to  neutralise dilution of RERA rules by ruling that all ongoing  and completed projects , come under its purview and mere filing of  application for OC/Part OC with DTCP, on technical grounds, does not  exempt the project from  HARERA. K.K Khandelwal, Chairman, HARERA, Gurugram says that this ruling has neutralised the effect of dilution of rules to ensure that HARERA functions in line with true spirit of  the central Act.

Efforts to create project-completion mechanism

Some buyers associations have offered to take up delayed projects, especially those  that can be completed with customers’ pending payments. The Housing ministry that earlier talked of creating  a mechanism for projects  completion through Asset Reconstruction Company, have done precious  little. Jaxay Shah, President, CREDAI National, says that they had even suggested to government authorities to bring in credible and  resourceful developers to take up stalled projects as investors or co-developers and complete them by using escrow mechanism, ensuring that  cash flows  from unsold part of the project are used towards balance  cost of construction.”

To ensure  RERA’s efficacy, various home buyers associations are demanding creation of a stressed fund to complete delayed projects, with public sector agency — NBCC, taking up these projects.

— The writer is founder, Ground Real(i)ty Media