Star Rating to be the game changer of real estate: Balvinder Kumar, Member, UP RERA

Balvinder Kumar, member of the UP RERA is no stranger to the functioning of the real estate and the government agencies. As a former bureaucrat, he has seen it as an insider with many key positions, including his stint with the high profile Delhi Development Authority (DDA). In an exclusive interview with Ravi Sinha, he shares his roadmap for making RERA an ideal platform for due diligence as well.  

In only its second year of functioning, the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has fast been emerging as a trust resource for the aggrieved home buyers. This is despite the fact that UP real estate is home to some of the most notorious property markets of Noida, Greater Noida and Ghaziabad. A number of fast track judgments by the UP RERA has ensured that both the builders and the buyers are looking up to RERA more seriously than many other States.

Ravi Sinha: When RERA came into existence there has been a big question mark over its functioning in Uttar Pradesh. Now in its second year, it has earned the trust of the home buyers. How differently have you handled the challenges here?

Balvinder Kumar: In a broader perspective the NCR has been the worst affected, whether it is the delay in delivery of the projects or the projects that have failed completely. There are a large number of abandoned projects. If we see the frauds and cheating by the builders, those cases are maximum in this pocket. So far 13,000 complaints have been filed before RERA and we have thus far succeeded in issuing orders in about 8000 odd cases.

Of course, we have another challenge of the compliance of the orders that we have passed. But gradually there has been confidence among the buyers that they will get justice through RERA. We are taking various measures to build confidence among the buyers.

Ravi Sinha: Keeping in mind the financial stress in the market, many of the developers are not in a position to deliver the projects here. How do you handle that situation?

Balvinder Kumar: Basically there are three kinds of situation. First, when the construction work was stalled for a long time due to farmers’ agitation. Second was the orders of NGT (National Green Tribunal). And the third situation was where there were many court cases because of the land dispute. Due to these reasons construction was stuck up for a very long time. Now the State Government has decided to give zero period benefit to the builders, in cases where the construction work could not happen, and there will not be any interest amount charged for the pending period. It is a big relief to the builders that the State Government is giving.

Moreover, the Central Government has come up with stress fund scheme wherein they are pooling about INR 25,000 crore, and they will be extending loans to these builders to complete their projects. So, the benefit offered by the State Government as well as the stress fund of the Central Government will prompt the builders to complete their already delayed projects.

Ravi Sinha: Most of the consumer demands are for delayed penalty or refund?

Balvinder Kumar: The buyers are approaching to us primarily for refund of their money, mainly because the real estate prices have fallen considerably in the last 4-5 years. So, the buyers feel that if they get the refund along with the interest that is far more beneficial than taking the possession. However, we are taking a very balanced approach because in all the cases if we reward refund then many of these projects that would otherwise be completed would not be completed.

With this balanced approach what we are doing is that where the builder is giving us a fixed timeline maximum up to December 2020, we are asking the buyers to take possession along with delay penalty. We are giving delays penalty of MCLR plus 1% for the period that the project has been delayed.

Ravi Sinha: There is a general apprehension in the minds of the buyers that even if RERA awards them delay penalty, the developer will challenge it in the higher courts. And not all the buyers from NCR could go to Allahabad High Court to contest that.

Balvinder Kumar: As far as appeal is concerned, there is an Appellate Authority that is stationed at Lucknow. All the builders have to deposit 30% of the amount before their appeal is admitted. It is not that easy for the builders to file appeal in each and every case. In 99% cases the High Court is not admitting the case against the buyers. They are directing the builders to exhaust the remedy of appeal that is available under the available legal provision.

In cases of refund where the builder is not completing the projects within the time frame, which they had given to us prior to the passing of the judgments, in those cases we are issuing the notices to the builder to comply with our orders. If they fail to do so in 45 days, then we are issuing recovery certificates and sending those recovery certificates to the District magistrate for recovery of amount.

Ravi Sinha: How do you deal with the situation when the delay is on part of the government agencies?

Balvinder Kumar: For that now the State Government has already passed the order of zero period benefit where the construction work has stopped. In case of the delay on part of the government authorities in granting the Occupancy Certificate or Completion Certificate, we are also pursuing with the government authorities to promptly issue the Occupancy Certificate once the construction work is completed.

Ravi Sinha: A number of RERA members from across the States have gone on record saying that RERA needs more legislative teeth to make it more effective. Do you agree with that?

Balvinder Kumar: I don’t completely agree because I feel that we already have substantial powers to implement various provisions of the legislation. However, I feel that there should be one additional provision added in the legislation; and that is the power to issue directive to different institutions as well as government agencies, so that whenever we feel that something needs to be done to give due benefit to the buyer or the builder then there should be binding directive for these agencies. If we get this one power, it will help us a lot. Otherwise also, I feel that sufficient powers and provisions are already there with RERA to make it an effective legislation.

Ravi Sinha: We are talking about a State that is home to some of the most notorious property markets of Noida, Greater Noida and Ghaziabad. You have a long backlog of delays & defaults. How long will it take to clean the system?

Balvinder Kumar: It will take 1-2 years before all the projects are streamlined. As a matter of fact, the year 2019 has been quite good; many projects have been completed; and thousands of buyers who have been waiting for a very long time have got the possession. 2020 will again be a very crucial period and I feel that more than 50 projects that have been delayed will be completing, either fully or partially.

Ravi Sinha: RERA is a grievance redressal forum for the home buyers. Can it do something where RERA acts as a watchdog for due diligence as well?

Balvinder Kumar: We are starting Star Rating for the same and we have already awarded work to one consultancy firm to start Star Rating system wherein all the builders as well as their projects would be rated on 1 to 5 star for the convenience of the investors and the buyers. With this Star Rating they will come to know about their past performance, quality, maintenance, and all other related things which any buyer or investor is eager to find out before investing money.

Hopefully, we will be implementing this Star Rating in the next 3-4 months and the buyers will be in a far better position to judge the project as well as the builder. It will be builder specific as well as project specific because the builder may not be as good otherwise but some of his projects can be of very high quality. So, we are going to rate projects as well as their promoters.      

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