Real Estate Law Will Bring Consolidation To The Market, Says Punjab RERA Chairman NS Kang
It was on May 1 last year that the Real Estate (Regulation and Development) Act, 2016 came into force. While may states are yet to implement the draft rules under the real estate law, Punjab is one of the first few states which has already set up a full-time Real Estate Regulatory Authority (RERA) . It also has a functional online portal where homebuyers can raise complaints and search for registered projects. Housing News Editor-in-Chief Jhumur Ghosh in a conversation with Punjab RERA Chairman NS Kang discussed the future of the Act in the state and how different stakeholders are dealing with the new legislation:
Ghosh: What has been the response to the Punjab RERA so far? How many registrations have you received and how many complaints?
Kang: So far, we have received over 500 applications for project registrations, of which 303 projects were registered till January 1, 2018. Almost 200 applications are pending and would be registered as soon as the documentation work is completed. As far as agents are concerned, we have registered over 800 property brokers so far and we are expecting to cross the mark of 1,200 agents in next few months.
We have received 74 complaints so far which are pending with the authority and around 24 complaints pending with the adjudicating officer.
Ghosh: How are developers and homebuyers responding to the RERA? Are they feeling confident about the benefits of the RERA?
Kang: The established and law-abiding developers are happy about the Act. They feel that this law will separate wheat from the chaff. Homebuyers who used to go to small-time developers because of cheaper products or maybe personal contacts will ultimately move away from them. In any way, it is the organised construction sector that has welcomed the real estate law. However, the impact of the law would be visible only in next couple of years.
On the other hand, smaller developers are not happy with the new law, feeling the cost of compliance is too high. This might cause a churning in the sector and some consolidation, too. For homebuyers, it is a win-win situation. The bargaining power between promoter and homebuyers was totally disproportionate. Now with so many obligations specified, the playing field for both promoters and the buyer will be levelled. This would be the measure of our success if we manage to ensure the level-field in the sector.
Ghosh: How similar would you say is the Punjab RERA to the Central Act?
Kang: The Real Estate (Regulation and Development) Act of Punjab is very similar to the Central Act. The only change and slight dilution that we had done is the concept of partial completion certificate, which has been introduced in the Punjab RERA. The Central Act talks about only of the completion certificate. However, according to the Punjab RERA rules, if you even have a partial completion certificate, the project won't be counted as an ongoing project. For instance, for a developer who is developing 15 phases but has finished construction of 10 phases with supporting infrastructure and has partial completion certificate, these phases won't be counted as an under-construction project.
Ghosh: Each state has defined ongoing projects in its own way. The Punjab RERA rules define ongoing projects as those real estate projects which are ongoing and in which development and development works are still underway. It excludes the area of a portion of the real estate project for which partial completion or occupation certificate, as the case may be, has been obtained by the promoter of the project. Home buyers in various states have raised objections with the way states have defined ongoing projects. How have homebuyers in Punjab responded to the state's definition of ongoing projects?
Kang: Few promoters did try to use this loophole by claiming their partial certificate to be the completion certificate and won't get register with the authority. We have discovered few defaulters and have brought to public notice not to believe this interpretation. As far as homebuyers are concerned, we have not received any adverse reaction from them on why partially completed projects are excluded.
Ghosh: There have been some media reports that certain developers have continued to advertise their projects without registering or mentioning their RERA registration numbers. What kind of action has been or will be taken against such errant developers?
Kang: We have already issued notices to eight developers for not mentioning their RERA registration number in their print advertisement. We have also issued a direction under Section 37 of the Act which says the registration number in any advertisement on the visual media should be mentioned prominently on top right-hand corner of the frame so that homebuyers know where to look for. For non-visual media such as SMSs or FM radio, the number should be highlighted prominently. This is a formal direction which was issued a few days back.
Ghosh: What kind of punishment does the Punjab RERA give for developers who have defaulted on their fines?
Kang: The punishment is laid down in the act itself. Largely, the authority has the power to impose fines in the first instance. There is only one such section that empowers the authority to move to competent courts for imprisonment that is for consistent violation of the Section 3. So far, we have not imposed fines on any of the defaulters but have issued notices on which promoters have accepted their lapse and have promised to not do so in the future. However, we still have around 100 complaints to look into and might find an appropriate case where we would levy fines.
Ghosh: As the chairman of the Punjab RERA, what is your hope for the RERA to achieve, for the homebuyers and the real estate industry in the state?
Kang: We hope to implement Preamble to the Act in full measure. The Preamble talks about a lot of things, including the planned and transparent development of the sector, protecting the interest of stakeholders especially consumers and providing effective grievance redressal machinery. We expect developers to operate in a comparatively clean and honest environment where they get full returns for their efforts. For homebuyers, we request them to enter into the transparent transaction and know what they are paying for.
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