The 5th, woody, anniversary of RERA: Abhay Upadhyay-FPCE

--By Abhay Upadhyay-President of Home Buyer's body FPCE

The Real Estate (Regulation and Development) Act, 2016 (hereinafter RERA) was enacted with lots of hope and expectations amongst homebuyers; perhaps being the only legislation for which a pan India movement exerting public pressure was mounted on Parliamentarians. This was vaguely acknowledged by the then Housing Minister during his address on the floor of Parliament. 

It is pertinent to ask, after 5 years of the Act coming into force - has RERA achieved its objectives?

As on 1st May, 2021 - 63,810 real estate projects and 50,420 real estate agents have been registered across the country; and 66,779 complaints disposed-off by the Real Estate Regulatory Authorities (Source: Website, Ministry of Housing and Urban Affairs (MoHUA)). These numbers seem significant, but mere registrations or case disposal cannot be a true yardstick to assess success. 

To truly gauge success we need to seek the right set of information. (1) How many projects registered with RERA so far have been completed within the time stipulated at the time of Registration; (2) How many Projects are delayed and what is the average delay period; (3) In how many projects there are no cases from homebuyers - to know the degree of satisfaction from the angle of meeting expectations; (4) How many Orders for refund have been issued and how many homebuyers actually received the refund money; (5) How many orders were passed under Chapter VII of RERA penalizing developers for not obeying the orders of the Regulatory Authorities and how many developers actually complied with such orders; etc. etc. 

Neither the Authorities by themselves, nor the Administrative Ministry MoHUA, provides such information. I doubt if any analysis on these parameters have even been carried out. 

If ever there is such an analysis, it is anybody’s guess what will be the score of RERA on the aforementioned parameters. It is a deliberate and well thought out strategy on the part of regulatory stakeholders to merely talk about the number of Projects and Agents registered; and the number of cases disposed-off, to create an illusion of the success of RERA.

RERA was necessitated to bring in transparency, weed out unscrupulous developers and free the sector from all malpractices prevailing in the sector. In order to get the desired result, it was imperative for the Regulatory Authorities to pro-actively monitor the progress of the project and take corrective action before it is too late to ensure handover within stipulated time. An important function was to constantly ensure that project funds were no more being diverted, including by false certifications.  

Furthermore, the Authorities should have initiated inspection on completion of real estate projects, to see if all the promised facilities and amenities were provided and quality of construction was also upto the mark. In case of deficiencies suo-moto action should have been initiated to correct the mistake or pay compensation while handing over the units to the allottees without the need to file complaints. This one proactive action could have set things right for the sector in one go.

But as is evident that nexus between developers and authorities creeped in this new regime also and therefore rather than focusing on the core issues facing homebuyers as aforementioned, the Regulators deliberately deviated and shifted their focus on unnecessary and unimportant issues like formation of Conciliation forum (CF) and Self-Regulatory organization (SRO), labour training for quality/standardization, rating of real estate projects etc. 

It’s beyond comprehension that a sector where millions of homebuyers have been stripped of their life savings, the focus will be on anything other than protecting the interest of homebuyers on top priority basis.

A major setback being faced by homebuyers is the non-execution of Recovery Certificate (RC) issued by the Authorities, rendering RERA ineffective with developers taking RERA for granted. This can be dealt by an independent wing within the office of the District Magistrate to execute RC’s. The Authorities, if serious, can upscale this matter with the state Chief Minister and concerned officials, through a proposal in this regard. No such action clearly indicates that the will to find solutions is missing among the Authorities with homebuyers left in the lurch. This is no justice and in fact it adds to the misery of homebuyers.

Many other issues such as orders being reserved by Authorities for months and project information not being updated affecting informed decisions has come to haunt the success of RERA. If the Authorities regularly interacted with homebuyers and their Association to understand their concerns, it would receive true feedback on shortcomings helping to bring improvement in its overall functioning. 

Needless to say, the Central Advisory Council meeting has not been called by the Ministry of Housing and Urban Affairs, Government of India except on two occasions in last five years. The second meeting was called last year only to provide relief to developers by allowing them an illegal blanket extension for completing their real estate projects while no such benefit was extended to homebuyers.

In this midst, one ray of hope and an important milestone is the recent decision of the Hon’ble Supreme Court declaring unconstitutional the West Bengal Housing Industry Regulation Act, 2017 (WBHIRA), which we had challenged through our not for profit company Forum for People’s Collective Efforts (FPCE). This has now paved the way for uniform RERA pan India.

In a nutshell, in our experience past 5 years, the failures and shortcomings of RERA have outweighed benefits derived from it by a wide margin. We can only hope that the administrative Ministry of MoHUA will now wake up from its deep slumber and take appropriate steps to ensure that RERA becomes more effective and it meets the expectations of homebuyers.

Abhay Upadhyay is President- Forum For People's Collective Efforts and also a Member, Central Advisory Council, RERA, Ministry of Housing and Urban Affairs, Govt of India. He is credited for first raising the voice for a stress fund for the realty sector which later became a reality.