States have been half-hearted in their efforts to implement the Real Estate (Regulation and Development) Act, 2016, (Rera), a year after the central law was officially notified following a seven-year long passage through Parliament.
Research by real estate consultancy CBRE shows 13 out of 28 states and Union Territories (UTs) are yet to publish draft rules. In eight states draft rules have been published but these have not been finalised yet. In only seven states rules have been finalised and notified. One state, Jammu & Kashmir, is out of the purview of Rera.
Rera, being a central Act, does not need to be passed separately by states. However, land being a state matter, various operational rules and clauses for implementing the Act are to be formulated and notified by state governments. Each state has to appoint regulatory authorities to oversee implementation of the Act. A scan of the evolving regulatory regime shows though states have broadly adopted the provisions of the central law, many have taken recourse to dilutions in some of the clauses.
Maharashtra, a key market for real-estate projects, has taken the lead in Rera implementation, notifying rules and establishing an authority, but it has watered down the law. For instance, the state has introduced a new nomenclature called “proposed plans” in the rules. In effect, it means developers in the state can submit their “proposed plan” to the regulatory authority. Some real estate experts fear that this may allow developers to market the “proposed plan” to unsuspecting buyers, who may not be ready to face the changes in sanctioned plans. Under the central Act, developers can submit only sanctioned plans to the regulator.
The state rules also provide discretionary power to the authority to withhold any information or document from being uploaded on its website for public viewing. This again is a departure from the central Act.
In Gujarat, a state that has finalised and notified the rules, Rera will not have retrospective effect. It will only cover projects launched after November 1, 2016.
The central Act defines “ongoing projects” as ones where development is going on and for which the completion certification has not been issued. However, Uttar Pradesh has introduced some riders to this clause that work in favour of developers. The rules allow exclusion of ongoing projects from the ambit of the new law where the developer has filed an application with the authority for issue of completion certificate, or where the services have been handed over the local authority for maintenance, among others.
The rules for five UTs, where there are no local Assemblies, were framed by the Ministry of Housing and Urban Poverty Alleviation, headed by Venkaiah Naidu. These rules are largely in sync with the central Act.
However, the draft Rera rules for Delhi, that have been notified, are framed by the Ministry of Urban Development, another ministry headed by Naidu. A few of the draft rules in Delhi are in deviation from what the Ministry of Housing and Urban Poverty Alleviation notified. For instance, the draft Delhi rules say that a developer will have to provide details of only those legal cases that have been disposed off, and not those pending adjudication in various courts. This is in contradiction to Section 4 (2) (b) of the Act, which clearly provides for information to be given with regard to details of cases pending.
Madhya Pradesh and Rajasthan have copied draft real estate rules provided by the central government in June 2016. The rules were later finalised and notified by the Ministry of Housing and Urban Poverty Alleviation on October 31, 2016. But these two states have not updated their rules in line with the final central Act.
“There are states that have notified rules that are contrary to provisions of the Rera Act,” says Abhay Upadhyay, national convener for the Fight for Rera, a pressure group that has been campaigning for Rera’s implementation.
Some of these state-level implementation concerns have now been taken up by the Committee on Subordinate Legislation of the Lok Sabha as well as the Rajya Sabha, following a petition by Fight for Rera.
Neerav Merchant, partner at Mumbai-based corporate law firm Majmudar & Partners, says if the committee in its report concludes that there is a case of states watering down the central Act through their rules, then there is a clear case for public interest litigation.
“Rera is not magic, but a gradual process. It will take time before consumers can expect genuine redressal of their grievances,” says Gulam Zia, executive director, advisory, Knight Frank India.