RERA: Impact in Real Estate Sector in India

By: Advocate Kirti Sharma

Advocate Kirti Sharma

Introduction

The real estate sector was extremely unorganized before the commencement of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), The real estate sector underdeveloped and deregulated sector. For example, for the welfare of the public the regulatory bodies have established, So that the general public doesn’t face adverse effects Such as stock exchange, have regulatory body SEBI (Security exchange board of India), but the Real sector in spite of being one of the major sectors, it does not have anybody which governs the whole real estate sector. The consumers made huge investments but there is no protection given to save the interest of the person.

RERA Real Estate (Regulation and Development) Act, 2016 (RERA Act)

On the other hand, many developers and builders enjoy the advantage due to lack of ruling as they misrepresent themselves, The developers /builders misused the position also they were not keeping the transparency between the buyers and the developers and even the agreement which were made is a bias towards them. At the time of delivering the possession of the property, creating unnecessary issues impose an unnecessary extra cost. Lack of regulation and incomplete information led to discrimination and one-sided contracts.

On the other hand, Builders/ developers also face issues due to unpredictability of the real estate sector and lack of protection when buyers backed out from the project after its completion or in between also or when they hesitate in buying them. Because of these issues, even the investors also are not intense to invest in this sector, which is eventually faced by the developers/ builders. All these issues led to the degradation of the real estate business in India.

Aim and Purpose of RERA Act

The purpose of securing the interest of the developer, builder, and general public, the Government initiated action and established the regulatory body for the Real estate sector, and amend the provisions from time to time. There was a dire need for regulatory mechanisms and adjudicating bodies to control these issues related to real estate, therefore the Real Estate (Regulation and Development) Act, 2016 comes into existence.

The overall purpose of the RERA Act is to regulate and promote the real estate market and to assure the sale of property like plot or building or any project with transparency and in an effective manner in India.

It was made to protecting the interest of the buyers or customers from any kind of deception and it also set up the adjudicating body for immediate remedy of grievances and also established Appellate Tribunals for appeals for redressing the grievances.

The aim of the Act is to regulate the sector of real estate business in India also safeguarding the interests of customers, by eradicating immoral and fraudulent practices, by providing a single desk to resolve the conflict, managing the Agents in this market, and defining the terms in real Estate and widening its scope, bringing transparency by making the registration of, developers, builders, promoters, Agent obligatory with regulatory authority, publishing project on its official website which can be retrieved by the public, providing solution in case there is a default in construction and many other.

Real Estate Regulatory Authority

It is a Central Legislation but the authority is present in the Centre, in each State, and in Union Territory. Its function is to see the transactions related to real estate in that particular State or UT and to synchronize the effort of the Government and the various stakeholders in the real estate market. Therefore, we can say that the Authority acts as a nodal agency. The Authority facilitates the growth and promotion of a healthy, transparent, efficient, and competitive real-estate sector and also makes recommendations to the appropriate Government. The main purpose of the Authority is to develop the real estate market in India, which will boost the economy, and also to make necessary suggestions to the Government regarding the development of this sector.

Registration of Real estate Agency and Real Estate projects.

As per the provisions, In the case of the real estate project, registration is mandatory for the project, if the area of the land exceeds 500 sq. Meters or proposed real estate planned for more than eight numbers of apartments. In the case of a Real estate Agent, to sell any building, plot, or apartment, it is compulsory for the developer or the builder to register himself under the regulatory authority.

Responsibilities and role of the Promoter and Buyer

The responsibility of the promoter is to reveal all the particulars of the project along with necessary information related to the proposed project. The promoter is also under an obligation to rectify the defects in the construction of the project. The Promoter is under obligation to return the amount invested by the interested customers If any default occurs on the part of his side.

The Allottees can obtain a schedule at every stage also has the right to obtain the time schedule of the project from time to time. The Allottees can ask for the refund with the interest if there is a default on the part of the promoters The promoters have the right to claim the possession of the property as per the promoter’s declaration.

Dispute Settlement Mechanism

Before the commencement of this Act, Mostly, consumers had the option to approach the consumer court for taking the resolution of the grievances. But after the commencement of this Act, the consumers can go to the Real Estate Regulatory Authority (RERA), and Even If the consumers are disappointed with the order given by the authority, then they can also appeal in the Real Estate Appellate Tribunal, which has the same power as the Civil Court. Function The Real Estate Regulatory Authority (RERA) regulates transactions related to both residential and commercial projects. Also applicable on both ongoing and new Launch projects. The Appellate Tribunals are essential to adjudicating cases in sixty days. Regulatory Authorities have to dispose of grievances in sixty days.

Project excluded under RERA Act

As per the provision, sub-clause 2 of section 3, projects which excluded under the Act are:

(a) Where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases

 (b) Where the promoter has received a completion certificate for a real estate project prior to commencement of this Act; for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling, or new allotment of any apartment, plot, or building, as the case.

The Impact of the RERA Act on the Real Estate sector

Under this Act, if any default is done by the developer, builder, and parties, liable to pay the penalty imposed by the Regulatory Authority. Although Builder believes that this Act is hard on them and it is one-sided as it levies heavy penalty if they failed on completion of the project and there can be a genuine reason for non-completion of the project but the Act does not consider that point. The real estate business was extremely unorganized and underdeveloped which created various issues but instituting the Regulatory Authority in Centre, State level, and in Union Territories, curbs the problem of inefficiency, and also it helped in regulating the transactions not only in residential. Projects but also the commercial real estate project which improved the transparency and accountability in real estate market.

CONCLUSION

 In the real estate sector, the investment is extremely huge and because of that, it needs a proper regulatory mechanism which is provided by the Real Estate Regulatory Authority (RERA). This Act brought all the stakeholders such that buyers, developers, agents. The Act makes real estate transparent, efficient and accountable. After the commencement of this act the developers, builders and parties cannot create the monopoly or commit fraud by making one sided contract.

This Act favors the interest of buyers and therefore their rights are well protected which improved the trust of customers in the real estate market which results from an increased investment decision of the Real Estate Sector. This Act made it compulsory to disclose the project on the website which made the real estate sector transparent. This Act made dispute resolution fast and effectively by setting up RERA and REAT which specifically deal with real estate matters or disputes.

Now developers can approach the Authority in case where the buyer does not make payment for the project. This act brought stability to the real estate market in India. But still there are issues that need to be addressed like there are State rules and regulations related to this Act which created issues for the developers who have projects in more than one State and it hinders the object of this Act. It amounts to backing out from the projects by the developers which are in different States. RERA has a positive impact on the real estate market but there is a need to apply it uniformly in the whole of the country and also it needs to be neutral for both buyer and the developer.

End Notes-

  1. https://www.financialexpress.com/money/transparency-in-real-estate-improves-but-is-that-enough-for-homebuyersand-developers/2051603
  2. https://www.indiacode.nic.in/handle/123456789/2158?locale=en
  3. https://www.indiacode.nic.in/showdata?actid=AC_CEN_17_19_00033_201616_1517807328405&sectionId=8625&sectionno=1&orderno=1
  4. https://taxguru.in/corporate-law/all-about-real-estate-regulation-and-development-act-2016.html.
  5. https://www.icsi.edu/media/webmodules/REAL_ESTATE_REGULATION_AND_DEVELOPMENT_ACT.pdf
  6. https://www.ijlmh.com/wp-content/uploads/2019/03/Impact-of-RERA-on-Indian-Economy-A-Critical-Analysis.pdf
  7. http://www.financialexpress.com/industry/withimplementationofrerachallengespersist/668536/
  8. http://www.thehindubusinessline.com/news/realestate/reraimpactnewlaunchesdown41percentinreale statesector/article9752450.ece
  9. http://www.financialexpress.com/money/rerahomebuyerstoget10penaltyfordelayinprojectsbutisthate nough/659011/
  10. http://www.businesstoday.in/magazine/features/decodingindiasrealestateregime/story/250055.html
  11. https://www.projectguru.in/publications/reraimpactindiasrealestate/

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