It is perhaps too early to tell if the Real Estate (Regulation and Development) Act will empower home-buyers in the manner that was expected, given 20 states are yet to notify their Rules for implementation of the Act after it came into force on May 1. But the fact that some of those that met the deadline watered down the provisions should be an indicator of how reluctant states are to clean up what has been so far a loosely regulated sector. And why blame the states alone? Even though the central Rules are to apply in Union territories, the Union ministry of housing and urban development (MoHUD) has tweaked them for Delhi to the advantage of developers.
Poor regulation has meant that the sector has been plagued with delayed deliveries and stuck projects. So, it was crucial that the states retained the spirit of the central Act which, through strict licensing and delivery provisions applicable to developers, would have ensured that home-buyers were not left at the mercy of developers. The Rules notified by Odisha, Bihar and Madhya Pradesh largely mirror the central Rules. But Haryana, which notified its Rules last week, has entirely left out the provisions that require builders to disclose the details of the sanctioned plan and layout, giving them the leeway to make unilateral changes and not have to compensate home-buyers if the deviations disadvantage the latter. The central law, on the other hand, requires a builder to submit not only the sanctioned plan, layout specifications of the project or a phase thereof, but also, among other documents and details, requires the submission of the proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the home-buyers.
The Gujarat RERA Rules completely do away with the retrospective application that the central law provides for, meaning projects in the state that had not been certified as complete as of November 1, 2016—the central Rules were notified on October 31—have been left out of the ambit of the law. In a similar provision, as per a Business Standard report, the Uttar Pradesh Rules also keep ongoing projects that have not been certified as complete, but have applied for such certification, out of RERA’s ambit. In the case of Delhi, the MoHUD has allowed promoters not to disclose ongoing cases against their projects to prospective homebuyers.
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While some of the documentation requirements under RERA are indeed onerous for the builder, if states take the bite out of RERA, it is unlikely that there will be any meaningful change in the situation on ground. Any watering down of the central Rules by the states will only mean that Unitech-type cases—where the promoters have claimed in court that they don’t have money to compensate home-buyers for years of delay in delivery nor to recommence work—become less rare, if not common. The parliamentary Committee on Subordinate Legislation examining the states’ Rules for instances of dilution of the central law offers some hope.
States will do way to remember that though land and realty is a state subject, cooperative federalism is a two-way street. The Centre, on the other hand, needs to know that it can’t expect states to comply if it is going to make exceptions like it did for Delhi.