Deepa Jainani & Surbhi Prasad
The Uttar Pradesh government’s real estate rules have amended the definition of an “ongoing project”, allowing a builder to be exempt from the purview of Real Estate Regulation Act (RERA) even if he has just applied for a licence or received a part-completion certificate before the Act was notified.This effectively means that those builders who do not complete projects and leave home buyers in the lurch cannot be penalised as per RERA guidelines.
Clauses related to penalties for non-compliance by developers have also been diluted. While Central RERA recommends imprisonment for a term which may extend up to three years, or fine which may extend up to 10% of the estimated cost of the real estate project, or both, UP has included compounding of offence clause to avoid imprisonment and even the compounding has been limited to ‘maximum 10% of the estimated cost of the real estate project’, which means it may even be zero in some cases.
This is likely to encourage corruption as quantum of money to be paid will be at the discretion of the authority. As was given in the central draft rules and also provided in the final rules, this should be rolled back to match the Centre’s rule on ‘compounding’,” says Abhay Upadhyay national convener of Fight for RERA. As on date, around 834 developers have registered with the portal.
“UP has decided to keep all those projects outside the purview of RERA which have been either issued, or have applied for occupancy certificates. The main problem here is that of delayed possession. Projects that were launched 7-10 years back are still not completed. And because of this clause they will get an escape route. Home buyers who are battling these builders will find no redressal under RERA,” said Indresh Gupta, co-founder, Noida Extension Flat Owners’ Association.
According to industry officials, in Noida alone, around 50 under-construction group housing projects have been delayed by three to four years due to the slowdown in the realty sector. This has affected around one lakh buyers who had invested in projects that were to be delivered by 2012.
In Greater Noida, around 3 lakh home buyers in 63 delayed realty projects are yet to get possession of flats that were to be delivered from 2012. Similarly, 13 realty projects in the Yamuna Expressway industrial area, along the 165-km Yamuna Expressway connecting Greater Noida with Agra, are yet to be delivered.
“By exempting projects for which an application for completion or occupation certificate (CC/OC) has been made on or before the rules are notified, UP has taken a lenient attitude towards builders. A CC is a certificate given by the competent authority that the real estate project has been developed according to the sanctioned plan, layout and specifications as approved by the authority. An OC is a certificate issued by the competent authority to the developer permitting buyers to move into their apartments.
The Uttar Pradesh government’s decision to continue with the watered-down version of RERA rules that were notified by the Samajwadi Party government in October last year, has come as a major setback to home buyers in the state. These diluted rules are far more lenient to builders than those in the central RERA or Real Estate (Regulation and Development) Act, 2016 and therefore make it easier for them to evade the regulator.
Upadhyay of Fight for RERA said the UP real estate rules are a huge let down. “The state rules have redefined ‘ongoing projects’ in direct contradiction to central Act provisions and it excludes many ongoing projects from the RERA ambit as a favour to the builders. If not withdrawn, it will ensure the failure of RERA in providing justice to home buyers of any ongoing project,” he said.