The Real Estate (Regulation and Development) Act 2016, i.e RERA came into effect from 1st May 2016. It brought about a long awaited change in the Real Estate Landscape of India and was welcomed by all stakeholders in a positive light. It is classified as a consumer protection law with a focus on compliance by Real Estate Developers and Brokers, which were not covered by any other legislature.
3 years on, changes seen are dramatic in nature and implementation has been pervasive & transparent if not completely effective. Almost all states have notified the Rules, appointed an interim or permanent authority, and have a functional website in place, barring Assam, which doesn’t have a website which is required as per the act. It still needs some more clarity in various aspects and as the cases come in, precedents play an important role in interpretation but ultimately the principles of natural justice shall prevail.
First and foremost, let us look at why RERA is Important.
Real Estate & urbanization in India has grown at an unprecedented pace in the new millennium. Along with it came a wide variety of Issues which had to be tackled in the interest of all stakeholders.
Broadly the following types of problems were to be addressed:
It was virtually impossible for the prevailing legal system to hold accountable the large number of pending civil and criminal complaints against the builders and in some cases by the builder against the consumer. By assigning a specific forum and crystal clear guidelines, RERA leaves little leeway for any party to get away. Many complaints are by helpless clients who have lost their entire savings. And incurred huge loans to buy a property but have not been handed over the same. A majority of these cases belong to Delhi NCR.
In addition to delay in handover, some other types of problems like defect liability, carpet area disclosure, approval or land issues are also taken care of by RERA.
In Maharashtra alone, as on 10th October 2019: 9137 complaints have been received and almost 5856 disposed off while MP RERA has disposed off 2529 cases. It has reduced no of complaints overall as well because many people are now alert and try to stick to the guidelines.Retrieved from Official Websites of Maharashtra on RERA and Madhya Pradesh
Indian Real Estate sector has seen huge potential for Real Estate but somewhat the interest has dwindled due to Regulatory hurdles. Institutional Investors, FDI, REIT’s can only be successful with a good regulation and even Individual investors need more confidence in the system to be able to invest in a better and more transparent manner.
As per the Indian Real Estate Consumer Sentiment study by Anarock, the key reason to buy a property in 2018 was RERA for 22% of the Survey Respondents, however for Delhi-NCR region, the one most hit by complaints – it was 51% in favour of RERA. Therefore, more than half the buyers of 2018 clearly bought only because of confidence genereated solely by RERA. More surprisingly, for NRI buyers, more than 82% considered RERA to be a key reason.
People were starting to lose confidence in the market. And that is coming back to revive the sector in a big way through RERA. Moreover the price correction is also in a part due to RERA as many cases of fraudulent sellers which drive up the price have exited the market.
Importance to the Economy:
Real Estate is a huge contributor to the economy, and along with construction and its allied industries, is the 2nd larges industry for employment in India. And, it generated a large amount of revenue for the government . Real estate and construction together is the second largest employment provider in the country, next only to agriculture, according to the Economic Survey 2017-18, tabled in Parliament. The sector employed over 40 million workforce in 2013, and as per projections, it is slated to employ over 52 million workforce by 2017 and 67 million workforce by 2022.
With a huge population without a permanent house of their own, cities having slums, The demand for Real Estate is enormous. One cannot stress the problem of homelessness. Once it is solved, one may consider the problem of poverty also to be solved.
India will need 25 million more affordable housing units by 2030 as per the RICS and Knight Frank Report.
The Government along with a combination of Policies such as PMAY, GST, Demonitisation, Tax Benefits etc. feels its possible to eradicate homelessness and RERA is the keystone of the set of policies at the heart of it all.
Stay tuned till next time for Part 2 of our RERA Series which is Important clauses of RERA. Feel free to comment and ask any queries.
- Real Estate Consumer Survey by Anarock (PDF)- https://api.anarock.com/uploads/research/Indian_Residential_Real_Estate_Consumer_Sentiment_Survey_Report_H1-2019.pdf
- Maharashtra Website on RERA: https://maharera.mahaonline.gov.in
- Madhya Pradesh Rera Website: http://www.rera.mp.gov.in/
Author: Gaurav Jaina, Real Estate Developer & Consultant
Gaurav has 7 years of experience in all aspects of Real Estate development. He is an active member of Assam Real Estate and Infrastructure Development Association (CREDAI- ASSSAM) and currently holds the post of Joint Secretary in it. Gaurav has completed his engineering from University of Illinois- Urbana Champaign, USA and is an alumni of The Doon School, Dehradun.
RERA Series Index
- Overview: Why RERA is important?
- 7 Key Aspects of RERA with Relevant Sections & Examples
- RERA Agreement: Finer Points
- Authorities of RERA
- RERA Website
- Registration & Compliance
- Standard procedures- Best Practices for Developers & Agents
- Complaints and Appeals
- Important Judgements & Orders
- Conflicts & Way Forward