This article is written by Shobhna Aggarwal, currently pursuing B.Com LLB from Banasthali Vidyapith. The article deals with the problems and solutions for one who wants to register their projects in RERA (Real Estate Regulating Act), 2016.
Home is one of the basic requirements of an individual and every individual wish to have a home of their own and to buy one a lot of investment is required. Apart from this, to build one’s home and get possession of the house one needs to get associated with the builders they have their sets of terms and conditions which makes it even more difficult for a common man to build a house of their own. Earlier when there were no provisions related to the real estate sector laid down by the government or unregulated there was no transparency and consistency in the home-buying process and to maintain the checks and balances in the real estate sector before RERA and also there was a lot of delay in the work from the end of the developers but the introduction the RERA (Real Estate Regulating Act), 2016 has made it much easier and transparent.
The Real Estate (Regulation and Development) Act, 2016 is the Act of the parliament of India which seeks to protect the home-buyers as boost investment in the real estate industry Though the provisions of the Act has benefited us a lot it doesn’t seem this easy when it comes to the implementation mechanism and still today one faces so much difficulty in registering the project under RERA.
What comes under RERA
- The Real Estate (Development and Regulation) Act was passed by the Rajya Sabha on 10th March 2016 and Lok Sabha on 15th March 2016 and it came into force on 1st May 2016.
- It is followed by the principle “buyer is the king and builders will have to ensure compliances to avoid punishment”.
- Its main objective is to reduce delay in the work or timely delivery of the project
- Increased quality of work.
- All the building projects with an area of 500 square meters or more than 8 apartments are subject to the provision of RERA.
- And all the ongoing and under-construction projects which have not received the occupation certificate must mandatorily apply for the RERA certificate.
- The developer cannot take more than 10% of the cost without the commencement of the project.
- 70% of the money received from the buyers to be deposited in the escrow account which can only be utilized for the construction of the project.
- To provide structural maintenance for 5 years after possession.
- To rectify the issue within 30 days of the complaint.
- No discrimination based on caste, creed, sex so that the practice of building a home for a particular group is prohibited.
- If the provisions are violated the builder may be asked to pay 10% of the cost as a penalty or a face jail term of 3 years.
- Sharing information such as project layout and plans.
Major changes in the real estate sector
- Registration of the real estate project (Section 3).
- 70:30 concept in respect of sale proceeding received by the promoter and opening the separate bank account with the scheduled bank (Section 4(2)(i)(d)).
- Registration of the real estate agent (Section 9).
- Formation of real estate regulatory authority (Section 20).
- Formation of real estate appellate tribunal (Section 43).
- Civil courts barred from an entertaining dispute arising from this Act (Section 79).
Issues faced while registering a project under RERA
Registering on an online portal
Any new project has to be registered by the builder or the developer under the State real estate regulatory authority. The problem arises with the one who is not well versed with the electronic world would find it very difficult to switch from an offline platform to an online platform and the same was the case with the real estate developers. They found difficulties in registering on the online portal as they were not able to access the site. They were given a deadline of July 31 within which they had to register the project. The navigation of the website was very difficult and it is not at all user-friendly, one could not stand a chance against going wrong because if one goes wrong in doing the steps it needs to start all over again which is very time-consuming and this causes a delay in the work. Therefore a mass needs to be educated in accessing the portal.
Taking business associates on board
RERA is a new concept and one needs to educate people about the provisions and requirements of the Act and educating the entire population about the Act is quite a tough job. Many developers and builders face difficulties because they are not well versed with the Act and the same is educated by them to their customers and that’s where the problem arises, maybe the management in the top level is correct but by the time it comes to low-level management there might be things that are wrongly communicated to their customers and this is where one needs to look upon.
Lack of synchronization between government agencies
In common parlance it is always said that it takes longer than usual to do any work in relation with the government, and where the government is involved it always takes time, same is the case with the RERA, the builder has to construct the building at a stipulated time but due to default in the government system the work often remains pending, entertaining 8 government departments before proceeding with the work is quite difficult because it consumes a lot of time and money, therefore many works are getting late due to this very factor and the builder is not able to finish the work on time. The builders were also not aware of the fact that they need to file an occupation certificate mainly because of a lack of synchronization between the builders and the government agencies. Therefore a lot of delays are caused due to the consumption of time in getting approval and clearances from the authority.
Marketing ongoing projects and multiple registrations
Another major issue faced by the provision of the Act is whether one could advertise his/her ongoing projects? The answer is in the affirmative that one could advertise his ongoing project as the Act clearly says that the developer has to register his project within 90 days but it has nowhere set out criteria where one cannot sell or advertise the project.
By applying for registration the builder has shown his interest in getting the project registered therefore there is a bar in advertising or selling the ongoing project.
Builders can advertise only those projects which will be handed over to the buyers; this means that if a township is coming up in phases and the clubhouse will be handed over in the third phase, then the developer cannot advertise the clubhouse in the first phase itself. If the centre extends the guidelines and the state governments make their portals more user-friendly, this will help developers register all their projects. The developer should not be penalized if the delay is due to the fault of the government.
In every field, it is required that the challenges faced by that field should be solved as early as possible and there should be someone who would listen to their problem and provide a solution for the same. Suppose one is facing difficulty in operating the laptop he has recently purchased and he goes to the shop to seek help for the same but he isn’t given a solution for his problem he would lose trust in the efficacy of the shop as well as the shopkeeper.
Likewise, the real estate sector also needs the trust and confidence of the consumers, developers, and the government authorities to keep it functioning like any other sector and for this to happen to complete the project and addressing the complaints, and resolving it as soon as possible should be the main focus of the developers. Earlier there was no Redressal mechanism but after this Act, authorities are ensuring timely delivery of the project but no complaint mechanism has been set up if the purchaser commits any fraud or does any frivolous activity.
The efforts should be from both sides it should be checked that no frivolous and unnecessary complaints are filed from the end of the consumers and also there should no biases in regulating the complaints by the authorities and only the builders are penalized for not doing the work, the equally important authorities should also be penalized.
Need of approvals
Getting approval and clearances from different stages and at different point of time has become one of the major issue and challenges for the developers and due to this the developers gets burdened with unnecessary work and also the cost of the project increases from passing on from one person to another them and due to this the projects often get delayed therefore there is a need for single-window clearance system where everything is available at a single platform for granting the regulating approvals. Housing policies would be a great success if this is done as the work would be done very efficiently and smoothly and the real estate sectors would flourish if this is taken into account.
Implementing the provision of RERA is very challenging; the developers started registering their projects from July onwards but there is no proper authority or to verify the said documents. The said documents have only been filled up and no verification has been done. RERA was enacted to ensure the timely delivery of the real estate project. Therefore a provision should be made to keep a check on the implementation mechanism of the RERA.
- Registering on the online portal should be made user-friendly.
- Speedy complaint mechanism.
- Single window clearance system should be adopted.
- Developers, regulating authorities, and consumers should be penalized for doing unscrupulous acts.
- The responsibility of informing about the transactions is on the builders who are at the advantage of manipulating the opportunity.
- The penalties should be even imposed on the authorities for not giving approvals and clearances timely.
- Strong commitment from both central and state is required for implementing the provisions.
- There should be stringent mechanisms and mechanisms.
- The approvals should be made convenient and shorter.
- Do not change the rules and regulations continuously.
- The developer should not be penalized if the delay is due to the fault of the government.
- There should be no difference in the state and central laws on the right of the land.
- Keep a check on the corrupt practice of politicians, developers, promoters, builders, and government officials.
The Real Estate Sector was regulated or brought into force to provide transparency and fairness in the real estate sector and to eradicate the corrupt practices of the developers and also to benefit the buyers and the consumers so that they are not cheated by the unscrupulous developer and to an extent, it has been able to provide justice to the Act. Usually, the buyers were not handed over the keys; they were made to wait for long tenures to get the ownership of their house.
Therefore, this Act has benefited a lot to the buyers but still, there are loopholes in the system like complaint management, need for approvals, compliance issue, lack of synchronization between the developer and the government authority, registering on an online portal which needs to be solved and amendment’s need to be made for the legislation to work properly, still there is huge scope for improvement of the Act and also there should be a system where one find out who is at fault and therefore a strict provision should be laid down for not implementing the work properly and also there should be guidance available to the developers to help them register their project and the form should be made more user friendly. Even after having the provision for the real estate (Regulation and Development sector), there are so many challenges for the proper execution of the RERA Act.
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