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One year of RERA: Tardy implementation restricts gains

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RERA-ACT
Photo Credit: Aparna Constructions

By Vinod Behl

Two years after the Centre notified the Real Estate Regulation and Development Act (RERA) of 2016 to empower and protect property consumers and make property transactions fair and transparent by regulating the sector, the sluggish and flawed implementation of the progressive act, has put a big question mark on the gains of RERA.

RERA was passed by both the houses of Parliament in March 2016 and on May 1, 2016 a majority of the sections of the Act came into force. Under this model Act, every state was required to set up its regulatory authority within a year (by May 1, 2017). And in the next one year, the states were mandated to make their RERA websites operational for the benefit of home buyers. Other sections were notified in April 2017 and on May 1, 2017 the full act became operational.

Today, two years after RERA became an Act, only 20 states have notified rules. What’s more, except for the states of Maharashtra, Punjab and Madhya Pradesh, which have permanent regulators, all other states are making do with interim regulators.

Under RERA, all developers need to register to launch projects, which get registered only after all necessary permissions and land for the project are in place. They are required to provide all the mandatory information to be up on the official website of RERA to help buyers take an informed decision about buying property.

RERA’s performance on this front is also dismal as 15 states are without an operational RERA website. Even on the functional websites, the projects information is either incomplete or questionable, with no way to check its authenticity. As a result of the weak and faulty implementation of RERA, home buyers are deprived of the gains and protection guaranteed under the Act.

Notwithstanding the criticism about flawed and slow implementation of RERA, this progressive regulation has helped in project execution and delivery, boosting demand and sales, in turn contributing to the revival of residential real estate, though the gains are limited.

As RERA takes root — along with low interest rates, stable property prices and the government’s loan subsidy for affordable housing — its positive impact is already visible. There has been an eight per cent hike in housing demand in Q1, 2018, compared to Q4, 2017. Home sales registered a 33 per cent rise in the top nine cities during this period. In fact, housing sales exceeded new supply by five per cent during the last two years.

It’s another matter that buyers have so far not developed complete confidence and prefer ready homes to avoid development risks. The preventive and penal provisions of RERA have made developers focus on deliveries, readying a good pipeline of completed homes for sale.

Besides various other factors, fund constraint has been the prime reason for large-scale delivery defaults. But RERA, aided by other key reforms like GST, FDI liberalisation, ease of doing business and demonetisation, have brought in much-needed transparency, fair play and financial discipline by regulating realty, in turn giving a boost to the confidence of global investors.

Statistics speak for themselves. PE investments witnessed 52 percent rise since 2014. PE investments grew 17 percent in 2017 to Rs 42,800 crore, as against Rs 36,590 crore last year, with residential realty attracting highest investment of Rs 15,600 crore.

RERA, besides empowering and protecting consumers, has put grievance-redressal on the fast track. It was following the enactment of RERA that a group of aggrieved home buyers could directly approach the National Consumers Dispute Redressal Commission (NCRDC), thereby bypassing lower consumer courts to ensure fast-track justice. It is also because of RERA that the government, development authorities and the judiciary have become pro-active in coming to the rescue of aggrieved home buyers of stalled projects.

The much publicised cases of Jaypee Infratech and the Amrapali Group are cases in point where developers are facing the ire of about one lakh home buyers. In both cases, the companies are staring at insolvency and the Supreme Court has come down heavily on the errant developers, saying it is committed to safeguard the interests of home buyers in terms of project completion and refunds.

Meanwhile, it is also the result of the pressure created by RERA that home buyers are set to get relief under the Insolvency and Bankruptcy Code (IBC) as the government plans an ordinance to treat home buyers as financial creditors to facilitate refunds.

Considering the pros and cons, RERA needs to cover a lot of ground for its effective implementation, in order to serve its desired purpose. And according to Dr Samantak Das, Chief Economist, Knight Frank India Property Advisory, in the current scenario, the sentiment that drives the purchase of residential property is unlikely to change. He may sound too negative. But one thing is certain: The patchy implementation of RERA has delayed the revival of real estate, especially residential realty.

Gautam Chatterjee, Chairperson of the Maharashtra RERA, the front-runner in the implementation of the Act, believes that this “transition pain of RERA” may last at least a couple of years. And Anuj Puri, Chairman of Anarock Property Consultants, sums up the scenario well, saying that although real estate recovery under RERA will be gradual, yet it will be extremely durable — and based on very sound market dynamics.

(Vinod Behl is Founder & Editor, Ground Real(i)ty Media, a real estate content consultancy. He can be contacted at [email protected])

IANS

India

‘Ex-HAL chief’s statements on Rafale factually incorrect’

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Rafale deal scam

New Delhi, Sep 20 : Government sources on Thursday dismissed as “factually incorrect” media reports of former Hindustan Aeronautics Limited (HAL) chief T.S. Raju claiming that the defence undertaking had signed a work-share contract with French company Dassault Aviation — the manufacturer of Rafale fighter jets.

“In the news item published (Thursday) ex Chairman and Managing Director, (CMD) HAL has been quoted as stating that an agreed work-share with Dassault Aviation (DA) was submitted to government. The same news item also referred to the cost of the aircraft, life cycle cost issues, etc. The statement attributed to ex CMD, HAL is factually incorrect,” said the sources.

The sources said that Raju was a member of the Contract Negotiations Committee of the Ministry of Defence (MOD) and “there were many major areas of disagreement between HAL and DA”.

They said that the HAL, in a letter on Oct 10, 2012 to the MOD, “brought out these disagreements pertaining to the work-share between them”.

“Subsequently in July 2014, HAL in its letter to MOD has also highlighted one major unresolved issue regarding responsibility sharing between DA and HAL for licence manufacture of the aircraft.

“Further, the man hours required for manufacture of various components of the aircraft in HAL was also a point of disagreement between DA and HAL. There is, therefore, a contradiction in the claims attributed to Raju,” they said.

The sources also said that the since the work-share between DA and HAL was “never agreed upon”, the statement claiming lower life cycle cost is “completely presumptive”.

They said that because of these reasons, the proposal for 126 Medium Multi-Role Combat Aircraft (MMRCA) could not be progressed further.

In an interview to a national daily, Raju who retired from the HAL on Sep 1, asserted that HAL “could have built Rafale fighters in India had the government managed to close the original negotiations with Dassault”.

Riding on Raju’s statements, the Congress led by its president Rahul Gandhi demanded Defence Minister Nirmala Sitharaman’s resignation accusing her of “lying”.

The party claimed that Raju’s remarks “nailed Sitharaman’s lie” that HAL didn’t have the capability to build the Rafale.

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Modi, Hasina jointly inaugurate oil pipeline, railway projects

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Narendra Modi Sheikh Hasina

New Delhi/Dhaka, Sep 18 : Indian Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina on Tuesday jointly e-inaugurated the construction work of a cross-border oil pipeline and a railway project, with the former describing the two countries as members of the same family.

Hasina and Modi joined the event in the evening via video-conferencing from Dhaka and New Delhi, respectively.

The 129 km India-Bangladesh Friendship Pipeline connecting Siliguri in India with Parbatipur in Bangladesh will transport petroleum products from Numaligarh Refinery in Assam. Of the total length, 124 km will be constructed in Bangladesh and 5 km in India.

“Geographically we may be neighbours, but emotionally we are members of the same family,” Modi said while addressing the programme.

“Our mutual cooperation in the last few years has shown the world that when two neighbouring countries strive to work together, what all can be achieved,” he said.

“Whether it be a decades-old border problem or development aid cooperation project, we have made unprecedented progress on all issues.”

At the same event, the ground-breaking ceremony of a rail project to improve Dhaka’s connectivity with Tongi and Joydebpur, two towns on the outskirts of the capital city, was also held.

Officials said 48.80 km of the two new dual gauge rail lines would be constructed on the Dhaka-Tongi route and a 12.28 km new dual gauge railway double line on the Tongi-Joydebpur route.

Tuesday’s inauguration of the two projects came a little over a week after both the Prime Ministers inaugurated two railway projects and an electricity project on September 10.

Stating that the pipeline will further boost bilateral cooperation, Modi said that energy was the cornerstone of any country’s development.

“The pipeline will help in the development of the northern Bangladesh. Though it is being done with grant-financing from India, the project will be dedicated to the people and government of Bangladesh once completed,” he said.

Modi said the railway project will not only bring relief to road traffic in Dhaka, but also boost freight revenues.

Speaking from Dhaka, Hasina said that ever since she formed her government in Bangladesh in 2009, she has been working relentlessly to deepen ties with India.

She thanked Modi for the new projects which she said will help in Bangladesh’s development.

External Affairs Minister Sushma Swaraj and Petroleum Minister Dharmendra Pradhan joined the video conference from Delhi and Bangladeshi Foreign Minister Abul Hassan Mahmood Ali from Dhaka.

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Business

No relief in sight from rising oil prices

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Dharmendra Pradhan

New Delhi, Sep 12 : There is no relief in sight from the rising petrol, diesel and gas prices which are burning a hole in the consumers’ pockets.

The government on Wednesday eluded questions on the subject at an official media briefing here, with Petroleum Minister Dharmendra Pradhan asserting that he would not answer questions outside of the day’s Cabinet decisions.

“We will confine ourselves to the Cabinet decisions only,” Pradhan told IANS when asked if a relief was in the offing from soaring oil prices.

The Minister also chose to keep mum when asked if the Union Cabinet discussed the issue on Wednesday.

On Monday, Pradhan had an hour-long meeting with BJP President Amit Shah after the opposition organised a Bharat bandh on the issue.

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