In a blow to home buyers, the governments of Uttar Pradesh and Haryana have both opted to dilute the Centre’s Real Estate (Regulation and Development) Rules. That clearly violates the spirit of the law that has been brought in to safeguard the interests of homebuyers. Both states—incidentally, ruled by the BJP—have given builders who are yet to complete projects a reprieve. The central law defines “ongoing projects” as those that had not received a completion certificate on the date of notification of the law. The idea of bringing under-completion projects under RERA was to protect home buyers who are yet to get possession of their flats. Also, several projects remain incomplete with the builder not having provided all the amenities as promised.
Both Haryana and Uttar Pradesh have let such builders off the hook by creating exemption provisions. Haryana has kept projects for which applications for completion certificates have been made in keeping with the Haryana Development and Regulation of Urban Areas Act 1975, and projects that have received partial completion certificates or partial/full occupancy certificates out of the purview of the regulator. The second exemption clause means projects where most of the work, save a few blocks, is not complete will not have to register under RERA. That means home buyers will have little recourse if the developer delays giving possession to the remainder of homebuyers or doesn’t build common use facilities such as community halls that were part of the approved project plan. Uttar Pradesh, similarly, has created four escape routes, including for projects where the sale deeds of 60% of the flats/apartments/houses have executed and for projects for which completion certificate has been sought.
For some perspective on the impact of such dilution, consider the fact that the national capital region that includes Gurgaon & Faridabad (Haryana) and Noida and Ghaziabad (Uttar Pradesh) accounts for nearly a third of the unsold inventory in the entire country. Project delays have added to the costs of homebuyers who took the legal route for a reprieve—Unitech, for instance, had been directed by the Supreme Court to compensate litigating homebuyers for delays, but the company has said it doesn’t have the funds to do so.
The two states have also carved other provisions that favour developers. UP has diluted the penalty clauses—it fixes a maximum (and no minimum) of 10% of the estimated project cost for the money to be paid for compounding certain offences, while the central law prescribes a flat 10%. Similarly, Haryana omits the “carpet area” definition, meaning homebuyers will have little clarity on whether the money they are paying to purchase a house also covers area such as terraces, balconies, verandas, etc. Homebuyers associations in Haryana are contemplating legal action to fight the blatant dilution of the central law. Given how land and realty is a state subject, it is difficult to say if the courts can get the state governments to amend the lax provisions. But since both states are BJP-ruled, it was expected that they would preserve the spirit of a law created by the BJP government at the Centre. Even stern warnings from the Union government have proved to be of little effect.