Cooperate for the consumer

Context: So far, the journey of Real Estate (Regulation and Development) Act (RERA) was successful and brought in a lot of benefits, especially for the consumers in the real estate sector.

Problems with Pre RERA laws

• A bill introduced in 2013: did not cover “ongoing projects” or “commercial real estate” and had high thresholds for registration of projects resulted in the exclusion of many projects.
• A law passed by Maharashtra in 2012: was not consumer-friendly.

Benefits accrued from the enactment of the RERA:

• Infused governance in a hitherto unregulated sector.
• Cleansed (to a large extent) the real estate sector of black money.
• Prevents fund diversion: As the promoters have to maintain “project-based separate bank accounts”.
• Prevents unfair trade practices: Due to mandatory disclosure of unit sizes based on “carpet area”.
  • It puts an end to the selling based on deceitful advertisements by stipulating that no project can be sold without project plans being approved by the competent authority.
• Reinforces equity: As the promoter has to pay “equal rate of interest” in case of default.
• Inclusionary in nature: While both “ongoing projects” and “commercial projects” are covered, the thresholds for registration of projects is also low.
• Cooperative federalism: Though the Central government piloted the Act, the rules are to be notified by states and the regulatory authorities.

Challenges faced by RERA:

• Frequent petitions against the law: Though the Bombay High Court had upheld the law in its entirety, the objections to the law may rise again.
• Some states do not display cooperative federalism: Rather, they display constitutional impropriety and poor governance. E.g. West Bengal ignored RERA and enacted its state law.

Success story of RERA:

• Welcomed by the states:  34 states and Union Territories have notified the rules, 30 states and Union territories have set up real estate regulatory authorities, and 26 have set up appellate tribunals. 
• Good participation by regulatory authorities: 26 regulatory authorities have operationalized a web-portal for project information to enhance transparency.
• High number of registrations: Around 60,000 projects and 45,723 real estate agents have been registered with regulatory authorities.
• An operational dispute settlement system: 22 independent judicial officers have been appointed to redress consumer disputes, and 59,649 complaints have been disposed-off.

Conclusion: Thus, the history of urban India and the real estate sector will always be remembered in two phases — “Pre RERA” and “Post RERA”.