The constant rate of acceleration towards urbanization has led to more and more demands for pucca roofs in cities and hence, the real estate sector is continuously under the spotlight. To reign this sector from adopting unscrupulous means, the Indian government introduced the Real Estate (Regulation and Development) Act of 2016. Thus, legal efforts were made in the year 2016 to streamline the activities of the real estate sector which had hitherto remained largely unregulated.
The RERA Act of 2016 is like a breath of fresh air for this potential sector. This particular Act has made legal strides to imbibe transparency, accountability, and clear-cut relationship among the stakeholders in the real estate sector.
The article will give a sneak peek into the provisions of the RERA Act and to what extent the Act stood on its words. The article will finally wrap up with a way forward.
Key Provisions of the RERA Act, 2016
- Establishment of Regulatory Authorities- A clear indication of cooperative federalism, where this central law has rules notified by the respective State governments on their own. Each state government will appoint regulatory authorities for regulating the sector.
- Bonafide stakeholders- To remain assured of the identity of developers, builders, and agents, they are required to register themselves with the regulatory authorities.
- Dedicated account- Creation of a separate dedicated account known as an escrow account where 70% of the collected funds from the buyers have to be kept. This eliminates the diversion of funds.
- Furnishing details- Explicit details about the project have to be furnished by the developers such as sanctioned plan, time for completion of a project, etc.
- Grievance redressal mechanism- The regulatory authorities as well as the Appellate Tribunal look into the complaints related to the real estate sector which must be resolved within 60 days of filing.
The current scenario
A legal act is merely a piece of paper with ornamental words until and unless some real work is done upon it. This same idea goes for the RERA Act, 2016 as well.
Up until now, 34 states/Union territories have notified the rules under the Act. According to the Ministry of Housing and Urban Affairs, 30 states have appointed regulatory authorities while 28 states/Union Territories of them have even set up an Appellate Tribunal.
The data from the Ministry of Housing and Urban Affairs indicates an improvement in the real estate sector due to the enactment of the RERA Act,2016. According to the data, 94,513 real estate projects have been registered so far. On a whole, 109% increase in projects and agent registrations over the last three years. Maharashtra recording the highest project registration.
The above data shows that new real estate projects are being legally recognized because of this Act. Now, what remains to be seen that how these projects will shape up in reality. Mere registration of projects does not speak of legality rather when the idea along with actual construction comes to reality will make this Act effective. Since real estate projects take time to fructify, one has to wait for a few more years to see how this Act takes shape in reality.
Many housing projects that were undertaken but left in mid-way have seen the light of day. This is due to the efforts of the Central government. An Alternative Investment Fund with a corpus of Rs 25,000 crores has been installed to revive such stalled housing projects throughout the country.
To secure the idea of affordable housing in the country, the Central government has reduced GST rates to 1% for such projects. This will accelerate the construction of such affordable housing projects.
What next?
- Some states/Union Territories have still not implemented the provisions of the RERA Act, 2016 whole-heartedly. Thus, states/UTs must ensure strict enforcement of the Act so that developers or real estate agents do not use loopholes to act illegally.
- Asymmetrical burden and punishment on developers would resist them to take on any new projects. To avoid this, the government must act as a facilitator and provide developers with the task of completing stalled housing projects at an affordable rate.
- Cooperative federalism concerning this Act may see testing times in the future. Hence, the Central and State/UT governments must keep aside their political differences aside and not let this Act suffer at any cost.
- The homebuyers must be vigilant from the registration of the project till they are handed the project. If they find anything out of the legal process, they must actively complain to the required authorities.
The real estate sector is the second-most employment-generating sector in India. Thus, the presidential assent of the Real Estate (Regulation and Development) Act of 2016 has been a watershed moment in the real estate sector.
Due to increasing urbanization, the demand for residential properties would keep on soaring. Therefore, the RERA Act of 2016 has come at a crucial time when transparent relations among stakeholders can provide basic housing facilities to people as well as lead to an overall growth of the real estate sector.
By: Ritika Sagar
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