The new Real Estate (Regulation and Development) Act, 2016 seeks to regulate and promote the real estate sector by protecting buyers’ rights as well as encourage developers but challenges remain in its implementation. Comment.
- Introduce with the new law
- Highlight the benefits to buyers and the builders
- Highlight the challenges in effective implementation
- Conclude appropriately
The Real Estate (Regulation and Development) Act, 2016 was enacted to bring in transparency, accountability in the real estate sector. It aims at protecting the property buyers, by providing a framework for reducing conflict with developers. Each state and UT will have its own regulatory authority called Real Estate Regulatory.
- To Buyers
- Significant buyers protection through stringent penal provisions
- Under the new realty Bill, an escrow account will be used to make sure that builders do not rob consumer.
- Buyers delaying payments and builders delaying hand-over of properties did not share same penalties thus far. Now, they will be made equal.
- Builders, apart from disclosing various details on architecture and engineering, cannot change designs or plans without approval from consumers.
- Clear definition of carpet area, fixing builders liability, ensuring exit of home buyers at any stage of construction through exit clause, isolating buyers from false/misleading advertisements etc. are few provisions which intend to make the buyers king.
- Ensures common and best practices as single-window clearances for projects, digitisation of records and grading of developers may help create a culture of quality and efficiency in the sector
- Will enhance confidence of investors, which in turn will bring higher investment and FDI
- The increased transparency would provide confidence to the buyers which will provide the required boost to the demand side.
Challenges in implementation:
- The Real Estate (Regulation and Development) Act, 2016 is a model law, and it is up to the states to draft and pass their own laws. Whether State governments are going to implement the RERA as it is or not is a challenge. For example, West Bengal has legislated its own Housing Industry Regulation Act.
- Many States have provided relief to the builders by excluding many ongoing projects from the regulatory net.
- Approvals for housing projects from urban local bodies across India are ridden with delays and graft. They have all been excluded from any accountability under RERA.
- A sense of unease among builders have prevailed due to a possible increase in the cost of capital due to maintenance of separate escrow account.
The implementation of the Act will be crucial to its success. Governments must ensure that proper infrastructure is provided to RERA so that they can discharge their services effectively.
Subjects : Yojna summary