In India, real estate has been a thriving business for many years. Despite being an important sector of the economy, the lack of a regulating body has given rise to corruption, unaccountability and fraudulent schemes. The last few years, specifically saw an alarming rise in unethical practices.
In March 2016, Real Estate (Regulation and Development) Act was implemented by the government to regulate the real estate market and help curb the malpractices.
Some major issues targeted by RERA are:
- Project delays by builders
- Charging for area outside home premises
- Defect in the house or construction
- Faster redressal of grievances
These risks were specifically true for under construction projects. The Real Estate (Regulation & Development) Act, 2016, to protect home buyers from devious developers became operational from May 01, 2017. The Real Estate Act laid down some guidelines to be followed by developers and enforced by RERA.
Despite the implementation of the Act, buyers who had invested in projects before the Act came into force and are yet to be completed are unsure if the Act will benefit them.
As per section 3(1) of the Act, ongoing / existing projects, which have not received completion certificate are covered under the Act.
“……Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act……”
Further for projects that are developed in phases, which is the case with many townships projects especially if you are a buyer looking to buy property in Gurgaon, Mumbai, etc., the Act says,
“Where the real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.”
According to the Urban Development Ministry, one month after the implementation of the Real Estate Act, only 18 states and union territories have notified RERA rules. Madhya Pradesh and Maharashtra are the only two states that have appointed permanent regulatory authorities.
Since the Act allows individual states to have different RERA rules, the inclusion of older projects under the Act will depend on the State Government’s rules for that region. For instance, people invested in older projects in Gujarat are not going to benefit from RERA since Gujarat has excluded ongoing projects from the Act as it would help smoother implementation of the new law.
To conclude, home buyers invested in projects before the implementation of RERA will have to ensure that they thoroughly understand the RERA rules implemented by their State Governments. This can get cumbersome for many as the fine print usually gets overlooked. The Centre has implemented the real estate act in its entirety in the Union Territories. The State Governments should follow suit and avoid diluting the spirit of the Act.