State RERAs And Recent Developments

After the implementation of the real estate law, developers and stakeholders across states are now looking at reaching out to potential homebuyers especially after industry bodies and market analysts have hinted at a visible recovery. The latent demand has clearly surfaced, thanks to the Real Estate Regulatory Authorities (RERA) established across various states. Maharashtra, Uttar Pradesh and Gujarat deserve a special mention. According to CRISIL Research, based on two key leading indicators - effective execution of RERA and developers’ action on housing projects with smaller configurations - these states have fared better in terms of both the aspects.

Maharashtra

For early adoption of the law and its implementation, the Maharashtra RERA or MahaRERA has taken the lead and was appreciated throughout for its regularity in matters related to the property market. As of March 2019, out of 20,264 projects, 80 per cent have been registered with the state RERA and only one per cent have not been registered yet. About 19 per cent have been completed. Of 19,257 agents, there is almost cent per cent registration with MahaRERA.

In terms of grievance redressal, MahaRERA is far ahead of other states. About 61 per cent of 6,328 complaints received has been heard and resolved.

Additionally, the Bombay High Court had also ruled that rules, as laid out by the MahaRERA, will also apply to long-term leases. A quasi-judicial body also ruled that all complaints with respect to properties in the state can be taken up by the authority. Over 50,000 non-registered projects, therefore, have come under the MahaRERA’s realm.

More recently, the MahaRERA also issued a standard procedure wherein homebuyers could remove a developer in case of undue project delay but only when a project isnt under any litigation. An association of allottees, not less than 51 per cent of the allottees will need to move the case and not individual homebuyers or a few families. Once the MahaRERA accepts it, the developer will lose rights over the project and his finances from banks would stand frozen unless a future course of action is decided. This is the first time that a state RERA has decided to take up such punitive action for homebuyers’ cause.

 

Uttar Pradesh

With Uttar Pradesh boasting one of the largest housing stock as well as unsold inventory, the moves of the UP-RERA does not miss the watchful eyes of buyers and industry experts alike. With 2,591 real estate projects registered with the authority, it is trying to be as proactive as possible.

Reports suggested that it will open its western UP bench in Greater Noida to ensure 4,000 pending cases from all over Noida and Ghaziabad get to bring their grievances for redressal. Despite the UP-RERA becoming operational in April 2017, it was only in August 2018 that it appointed its full-time chairman.

 

Gujarat

As of March 2019, 5,158 projects have been registered with the Gujarat RERA more than a year after it became effective in the state. Of this, 1,694 are affordable housing projects.

GujRERA has also heard 465 cases that have been resolved till March 2019. The dynamic website has so far served over 30 lakh visitors.

Last year, it was noticed that the state RERA had diluted some of the provisions by going soft on developers. As per the central law, the promoter of a project would face up to three years of imprisonment or penalty up to 10 per cent of the project cost, or both, for non-compliance.

However, the state government has a provision of “compounding of offence”, wherein the promoter can escape jail term if he is ready to pay “five per cent of the estimated cost of the real estate project.”

Madhya Pradesh

So long, government boards and authorities could charge homebuyers in a fixed date linked schedule but not anymore.

The Madhya Pradesh RERA has mandated that going forth, the authorities such as the housing board and the Bhopal Development Authority among others will now charge only on the basis of completion of a project, in short, a construction-linked plan as against a fixed payment plan (three-month, six-month or yearly instalments) and homebuyers were liable for a penalty if this was not paid within time. The government has taken heed and issued a circular to all the concerned authorities.

Moreover, these government housing boards will now require to mention a delivery date. This will track project delivery timelines. In case of delays, the yearly cost of escalation on land will not be charged saving homebuyers’ money.