It has been described as a consumer-centric Act, which will herald the beginning of an era in which the consumer is king. Not surprisingly, the builders’ lobby isn’t too thrilled and some believe it is trying to delay implementation of the Real Estate (Regulation and Development) Authority Act in Karnataka, where the final rules have still not been framed to enforce it.
A small time city builder claims the new law only supports and encourages major builders, but is unfair to small builders like himself, who are providing affordable housing to people. “Prices of houses will shoot up exorbitantly once it is enforced,” he warns, pointing out that several real estate projects have already been affected by the National Green Tribunal (NGT) order increasing the buffer zone around storm water drains and lakes in the city. “This spells disaster for those, who have already bought land around lakes. No developer will carry the loss or financial burden and will ultimately pass it on to the consumers, making housing more unaffordable, ” he says.
While admitting that some small builders do violate norms of local bodies in terms of set-back area and so on, he argues they are providing an essential service by catering to the middle class buyers, who could not afford to buy homes otherwise. “The Act should regulate the fly-by-night builders and not those , who are providing affordable housing and indirectly helping the government,” he insists.
As for the section of the Act that makes it mandatory for all builders developing a project on over 500 sq.m. sites to register with a real estate regulation and development authority before launching or even advertising it, he says it is not clear what those with projects on smaller sites are supposed to do. “Can they go ahead with the construction or not?” he asks, adding, “We are waiting for the rules framed by the state government to throw light on many such aspects.”
Law to weed out delays, fly-by-night operators, says CREDAI secretary
The endless wait to get possession of your dream home while paying rent and EMI will come to an end with the implementation of the Real Estate (Regulation and Development) Authority Act, believes Mr Suresh Hari, secretary of the Confederation of Real Estate Developers Association (CREDAI), Bengaluru.
“RERA seeks to address issues like delays, price, quality of construction and title. Delays in projects are the biggest issue faced by buyers. Some buyers wait for at least two to three years to get physical possession of their houses while the builder gives some lame excuse or the other for the delay,” he points out.
Happy that the mandatory registering of builders with the regulatory authority will weed out the unscrupulous and fly-by-night operators, Mr Hari says delays too could be a thing of the past now with the new law making it clear that the builder or promoter of a real estate development firm must maintain a separate escrow account for each of its projects.
“A minimum 70 per cent of the funds from investors and consumers must be deposited in this account. This money can only be used for the construction of the project and buying the land required,” he explains, adding that RERA aims to provide clarity to buyers as the developers will have to inform them about their other projects as well.
“Every builder must now submit the original approved plan for his ongoing projects and any alterations made thereafter. He must also give details to explain how the funds were utilised, the timeline for construction, completion, and delivery. This will have to be certified by either an engineer , architect or even a practicing chartered accountant,” he says.
'Many in govt have real estate connections’
Rajeev Chandrasekhar, Rajya Sabha member
Home buyers in Bengaluru and Karnataka, as in other parts of country, have long been victims of exploitation by builders. It was to address this that the Real Estate Regulator Authority Act (RERA) was passed by Parliament on May 1, 2016. The Bill (whose select committee I was on) seeks to create a set of rights for home buyers and obligations for builders.
Its objective is to reform the real estate sector and put a stop to the long standing practice of unscrupulous builders cheating consumers. And towards this end it provides for an independent real estate regulator for each state and Union territory, penalties for violations and an appellate tribunal to resolve disputes on fast track.
But the state government has delayed implementing the Act, ignoring the deadline of April 30, for obvious reasons. Many in the government have deep connections with the real estate industry. At first, the builder lobby tried its best to derail the Bill, and having failed to do that, it has been working hard to delay or dilute the Act.
The government seems to be giving in as the draft rules prepared last year seem to be diluting some of the crucial rules issued by the Union government. For instance, section 4 of the draft rules on additional disclosure by promoters of ongoing projects conveniently omits important clauses and sub-clauses on transparency and accountability. This exposes the government’s complete disregard for the rights of home buyers , many of whom continue to wait for the keys to their homes after prolonged delays in construction. Delaying and diluting RERA will only serve to help the unscrupulous builders, who seem to have an extraordinary influence on this government.
