RERA (Real Estate Regulation & Development Act) has been the biggest reform in the business of Indian real estate
RERA has given confidence to the home buyers; RERA has empowered home buyers
RERA has improved transparency, accountability & consumer protection
RERA makes developers accountable by enforcing compliance, with project timeliness and financial management
Now wait! Before you blame me for these half-truths & plain lies, let me make it clear that these are not my words. These are some of the media headlines.
RERA (Real Estate Regulation & Development Act, 2016) that was implemented in May 2017 was said to be the biggest reform of arguably India’s most opaque and corrupt business of real estate. Unfortunately, RERA could not ensure an honest ecosystem in Indian real estate; even the efforts were half-hearted and questionable. Forget honesty & transparency, RERA could not even ensure a better home buying experience for an average Indian.
I am Ravi Sinha and on the eve of 8 years of RERA being put into place, I just have a simple question: Has the home buyying experience of an average Indian changed? A survey by Track2Realty early this year reveals the CSAT (Consumer Satisfaction) Score of Indian home buyers is as low as 18.5. If RERA has brought discipline among the erring developers, why is CSAT scroe of Indian home buyers so low even after 8 long years.
I believe it’s time for some serious questions. Last year, on completion of 7 years I had asked 7 questions with RERA that are still unanswered. On the eve of 8 years, let’s ask 8 burning questions, as a matter of fact 8 additional questions, that define RERA and Indian real estate at large.
Question#1: Is RERA registered project stamp of authenticity & trust?
RERA statistics of cases resolved vis-a-vis the ground reaities of average home buyers are in sharp contrast. The home buyers are not confident with RERA because RERA has not changed the home buying experiences of the buyers. What an average home buyer looks up to RERA is an assurance; where RERA registration number means a due diligence platform. If an average home buyer even today is being blamed for not doing his own due diligence then it is quite obvious that one would question the very existence of RERA. For an average buyer the government agencies that sanction the projects and the banks that finance the project failed to act as the custodian of due diligence. That is why RERA came into existence, at least one thought so. But RERA registered projects are today neither guarantee of timely delivery with promised amenities, nor assurance against cheating. RERA registered project means as much today as the advertised membership with any trade body like CREDAI.
Question #2: Has RERA moved beyond legacy issues to raise professional standards?
Dealing with the legacy issues of stalled housing projects has been a perfect alibi for RERA ever since its inception. But now after 8 years of its existence, a common home buyer has lost his patience. One has every right to know whether they have moved beyond the legacy isses in all these years. If not, how long will it take them to ensure an aggrieved buyer that they do mean serious business?
From the home buyers’ standpoint, if he has to finally get justice from the Supreme Court or NCDRC, then what is the role of RERA in cases of legacy issues? Forget justice, RERA has not been able to amicably settled the issues of legacy issues with the kind of solutions expected that it could set a precedent.
Question #3: Are post-RERA launched projects any better?
The advocates of RERA would like you to believe that RERA trust deficit is a result of legacy projects that has been stalled for years. They would also like you to believe that post RERA there is a lot of discipline in the business and most of the pending complaints are of pre-RERA days. This may appear to be a legitimate explanation, but only for those who have not been dealing with the builders in the post-RERA days. Project delays & defaults are rampant even with the projects launched after RERA.
Even if one discounts the challenges before RERA in dealing with the stalled projects, the ground realities have not changed with the launched projects post-RERA. Of course, the only thing that has changed is the builders’ smartness in dodging the proverbial bullet. Nowadays, the dateline of project delivery is no less than 8-10 years in RERA filing, but buyers are verbally told this is RERA formality and you will get delivery in 3 years.
Question #4: Is RERA only a compliance filing agency?
RERA for all practical purposes is just a complaince filing window but non-complaince galore and RERA seems to be ill-equipped to deal with it. RERA doesn’t have any monitoring at the ground. Non-RERA registerted projects with more than 500 sq meter size and more than 8 in number are opnly advertised in billboards. Even with registered projects, why can’t RERA ask a builder why do you need 8-10 long years to complete a 4 acre project with only 500 housing units? But no! RERA in many cases have rather awarded the timeline extension as well. MPR (Monthly Progress Report) & QPR (Quarterly Progress Report) is never questioned unless the project goes out of the hands of builders’ execution capabilities. Any reckless developer can launch a financially risky project like 10:90 scheme or 20:80 scheme where the buyers are lured. RERA only monitors, if at all, the escrow account and doesn’t summon the builder to question the project’s financial closure.
Question #5: Has RERA checked builders’ abuse of dominant position?
RERA was expected to check the builders’ high-handedness and abuse of dominant position, so that few cases reach to the higher courts and poor home buyers are saved from harassment of lengthy & costly litigation. RERA has failed to put an end to trauma of trial for the home buyers. Builders continue to define law as per their own convenience. Builder Buyer Agreements are still unfair and arbitrary; and the copy of BBA is shown to the buyer only after having made the upfront 10% payment. If you question or challenge it, your desposit is forfeited. Even for the layout and FAR changes, builders force the buyers to sign on the dotted lines with advance consent at the time of signing BBA.
Projects are openly advertised to sell on Super Built Up Area, only exception being that nowadays builders print the Carpet Area as well.
Question #6: Is RERA ill-equipped, legally untrained or just directionless?
An RTI asking whether there has been any legal training of RERA memebers, who are mostly ex-bureacrats and don’t come from legal background, the reply has been that there is no such information available. It is hence no surprise that there is no consistency in RERA orders by its different members. For example, RERA Act empowers adjudicating officers to take suo moto cognizance, but some RERA members claim their hands are tied till they receive a formal complaint. Builders continue to divert funds from escrow asccounts with misrepresnetation of facts and RERA ignores the project status in release of funds.
In a bizarre case, Karnataka RERA registry itself decided the maintainability of the case and dismissed it. Karnataka High Court had taken strong exception to this and clarified that RERA registry can’t decide the maintainability of the case.
Question #7: Has RERA been able to change its own perception of helping builders?
Why is RERA so lenient with builders that it violates the Act itself? As per RERA Act, a buyer is entitled to get refund even if the project has been delayed by a month. But in practice, forget refund, RERA has in some of the cases denied due penalties, or at max have given only MCLR plus 1% (and not the same penalty that bbuilder charges in cases of late payment) to the affected home buyer. Delay penalty & refund is often denied in the name of project viability. Builder’s request for project extension is easily granted, even when there is no valid explanation and heavy penalty is not imposed for being reckless with the project timelines.
Question #8: Who is happy with RERA as a real estate regulator?
The home buyers are obviously unhappy with an additional window of litigation. They are also unhappy with the fact that RERA orders are not executed. Higher courts have time pointed out poor judgments of RERA. The Supreme Court of is equally unhappy and has gone to the extent of questioning whether RERA stands as the rehabilitation center of ex bureaucrats. Whose interests are being served with RERA?
In the end, all that can be said in defence of RERA is that it’s a quasi judicial body that absorbs pressure from all – political establishment, builders & home buyers. The regulatory body members often wish they could have more powers but have thus far failed to exercise the powersw given. I just rest my case your honour.
Ravi Sinha
X : RaviTrack2Media
Ravi Sinha is a journalist with over two decades of cross-discipline media exposure. He is the CEO of real estate thinktank group Track2Realty. He has been writing extensively on the real estate sector for more than a decade now. Evaluation of real estate brand performance is his core domain expertise and he has immense insight into consumers’ psychograph. He has conceptualised Track2Realty BrandXReport as India’s 1st & only objective & non-paid brand rating journal that is industry-accepted benchmark of brand equity & ranking of the Indian real estate companies.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
Subscribe our YouTube Channel @ https://bit.ly/2tDugGl
