The Real Estate (Regulation and Development) Act, 2016, or Rera was hailed as the panacea for the various ills plaguing the Indian real estate sector. The idea behind Rera was to create a legal framework for the fair and transparent functioning of the industry. For far too long, the realty sector functioned in almost a legal vacuum which allowed a large section of developers and property brokers to give consumers the short shrift. Before Rera, most builders took buyers for granted, swindled funds in different projects thus leading to delayed delivery across several cities. There was also little transparency in financial dealings. The end result was that consumers had little confidence in the market despite massive pent-up demand. Rera was supposed to clean up the mess, incentivise honest developers and provide grievance redressal to consumers in order to punish the guilty. However, a year after it came into force, Rera resembles a project that is still under construction.
For instance, just three states — Maharashtra, Madhya Pradesh, and Punjab — have implemented full-time regulators under Rera, while 26 others still continue to kick the can down the road. The absence of full-time regulators will obviously make it impossible to implement any norm. That is not all. Only 19 states and Union Territories (UTs) have even a functional portal in place. In the jurisdictions that have a portal, the websites suffer from massive information asymmetries. The progress on the establishment of a Real Estate Appellate Tribunal is even more disappointing: only 15 out of the 35 states and Union Territories have moved on this. Even in states such as Maharashtra, where a full-time regulator has been put in place, the situation is not encouraging. Reportedly, 8,000 out of 13,000 ongoing projects registered are running behind schedule just in this one state. Moreover, anecdotal evidence suggests that despite the Act being in force, several developers have shifted delivery timelines. Often this is done to evade action under Rera. The grievance redressal mechanism, too, is far from being consumer-friendly.
The problems are far too many, but it would not be fair to dismiss Rera completely. The fact is that Rera has in its own way set the tone for the industry. The number of new launches has come down because there is greater pressure on developers to be transparent about the use of money. There is enough evidence to suggest that buyers have become more aware of their rights and developers more cautious. The fact that the sector is witnessing consolidation shows smaller real estate players are finding it tough to comply with the new rules. Also, it was following the enactment of Rera that a group of aggrieved home buyers could directly approach the National Consumer Dispute Redressal Commission, thereby bypassing lower consumer courts to ensure fast-track justice.
However, to truly achieve its mandate, Rera needs to be implemented in all jurisdictions. Even on the functional websites, information about projects is either incomplete or lacks credibility as there is no way to check its authenticity, as a result of which many home buyers are still deprived of the gains and protection guaranteed under the Act. There are quite a few aspects of the law that need improvement. For instance, simplifying grievance redressal. Or, clarifying what happens when a project is abandoned.