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Maharashtra Notifies Rules For Housing Regulator, More Than Half The States Pending

Will all the states implement RERA rules by May 1? 



Residential and commercial towers are seen through and reflected on an office building in the Lower Parel area of Mumbai. (Photographer: Dhiraj Singh/Bloomberg)
Residential and commercial towers are seen through and reflected on an office building in the Lower Parel area of Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Maharashtra on Friday notified the rules for the new housing regulator that rolls out on May 1 even as more than half of the states are yet to come out with final norms.

The Real Estate Regulation Act (RERA), 2016 will hold developers accountable for delays and gives the regulator the power to impose penalties. The first set of rules announced by Maharashtra largely follow the central Act.

The state authority will have the power to impose a fine of 5-10 percent of the entire project cost if the developer fails to comply with certain conditions, according to a notification. The rules call for registration of all commercial and residential real estate projects on over 500 square metres of land or with eight apartments or more. Developers are barred to advertise or sell a project without registering it. In extreme cases, the registration could be revoked, barring the developer from finishing the project. Builders and brokers will face fines for ignoring orders of the Real Estate Tribunal.

The RERA came into force last year after the President signed the Bill. The Act mandates each state to establish a State Real Estate Regulatory Authority within a year of the new law coming into force. While 13 states and Union Territories have so far notified the rules, 14 have not moved on beyond draft rules with just 12 days to the deadline. Two Union Territories have appointed interim appellate tribunals.

Maharashtra Notifies Rules For Housing Regulator, More Than Half The States Pending

Racing Against The Deadline

If the remaining states are in advanced stages of finalising the norms, they should be able to release the rules, said Neeraj Bansal, head of real estate and construction at KPMG. Ideally, public consultation should have been done but it would not happen in those cases, he said. “The State Real Estate Authority and the Appellate Tribunal can be formed in a day and won't take long.”

Since most of the states have delayed the process, they should release the rules in compliance with the Centre’s Act and if there is a need for revision, that can be done later, said Bansal. If they don’t release rules on time, there will be a vacuum, he added.

The central government had pulled up states on notification of rules before the deadline. Union Housing and Urban Poverty Alleviation Minister Venkaiah Naidu had chaired a meeting with secretaries of states and senior government officials to speed up the process.

When BloombergQuint contacted Naidu’s office seeking details of states that have delayed the implementation, his private secretary Saurabh Gaur said it’s a “dynamic situation”. “Every day, a few states are notifying the rules,” he said.

RERA has been created to ensure accountability towards the buyer and developers, protect consumers’ interests, ensure fair play and reduce frauds and delays, said Anshuman Magazine, chairman, India and South Asia, CBRE. Its another objective is to instill transparency in the sector which is needed for overall improvement in investor confidence and to encourage greater institutional capital inflows, he said.

Maharashtra Notifies Rules For Housing Regulator, More Than Half The States Pending

Dilution Of Norms

Yet there have been worries over some states allegedly diluting the rules in favour of developers.

Uttar Pradesh was quick enough to approve the UP Real Estate (Regulation and Development) Rules, 2016 but they have diluted the rules to favour builders, said Abhay Upadhyay, national convener, Fight for RERA. “Imprisonment clauses have been made into compounding clauses (money can be paid in lieu of actual punishment). This way, the builders will escape a jail term by paying penalty.”

BloombergQuint’s emailed queries to the Uttar Pradesh Housing and Urban Planning Department remain unanswered.

Similarly, Gujarat has also watered down the provisions of the Act. Neela Munshi, officer on special duty, ex-officio deputy secretary to the government of Gujarat (Urban Development Department), said only those projects which have been launched on or after November 1, 2016 will fall under the ambit of RERA in their state. This is in contrast to the central Act which covers all ongoing projects without completion certificate.