(Disclaimer: Numbers as per respective state RERA websites in August 2018)
Despite some encouraging number, it is evident that RERA has not been adopted in the manner and to the extent the Centre originally intended. In some states, there have been serious developer-favouring dilutions of the clauses meant to protect the interests of buyers.
Delay in project execution because of dilution of RERA, and the overall signal such dilutions send to the market will act as a dampener on buyers’ confidence. This, in turn, will affect developers' ability to sell.
There can certainly be circumstances under which a project can be delayed for which the developer cannot be held responsible. Among such extenuating circumstances, the failure by concerned Government authorities to furnish timely development permits without good reason probably counts the highest.
The effect that the more recent amendments will have depends on how different states interpret the concept of ‘exceptional and compelling circumstances’. RERA must define such circumstances clearly and satisfactorily to end-users and investors.
Also, Government agencies dealing with project clearances should be brought under RERA's ambit, as well. If RERA is to bring in genuine accountability, the accountability must be unilateral, not one-sided.
Major Dilutions
While many states are still in the process of notifying their RERA rules, there has been continuous fretting about the dilution of the rules recently notified by many states. In fact, there are multiple changes made by different states in the RERA proposed initially by the Central Government.
Dilution in ongoing projects’ definitions has left a huge number of projects out of the RERA ambit, and this is understandably a major concern for buyers.
A broad-based list of RERA dilutions:
- Introduction of exceptions to dilute the definition of ‘ongoing’ projects
- Penalty provisions related to imprisonment of developers
- Calculations on monetary fines or penalties as a percentage of project cost
- Payment schedule requirements
- Norms for escrow withdrawals
- Liability in case of structural defects
- Fees on filing complaints against the developer
To live up to the spirit of RERA, the Government must ensure at all costs that the RERA rules remain aligned and effective across all the states, while balancing the interests of both buyers and developers.
(Anuj Puri is the Chairman of ANAROCK Property Consultants)