Union government gets tough with states on RERA implementation

In a major boost to home buyers, union urban development and housing ministry has asked states to plug the loopholes in Real Estate Regulation ACT (RERA). A parliament committee has pointed out dilution of the RERA by the states in order to provide benefit to builders.

The parliamentary committee was asked to study implementation of rules for Real Estate Regulation ACT (RERA). In its report submitted in the Lok Sabha, the parliamentary panel has said that the most states have tweaked rules, which are beneficial to the builders but detrimental to the consumers.

The act was enacted to protect consumers but the onus to implement it was on the states. However, the parliamentary committee found that going against the spirit of the law several states including Rajasthan made changes suitable for builders. It said that because of this consumers are not getting the benefits they are entitles under RERA.

But, the union government has made it clear to the states that for effective implementation of the law while keeping in mind consumers’ interest, they will either have to change the rules not in accordance with the central act or frame new laws. Following the central ministry’s directives, the states will have to close the gap deliberately left open for benefit of builders.

Rajasthan where the RERA came into effect on May 1, this year is, among the states that circumvented the new act by leaving ambiguity in the rules. The state government while framing the rules defined them in arbitrary way.

As per the central act, ongoing projects have to be registered under RERA. It considers ongoing projects that have not taken completion certificate till the date act came into force. However, in Rajasthan has added several provisions, which are not in tune with the act.

To put an end to this the parliamentary committee has made several recommendations. It said that as per article 254 (2) of the constitution, the central government has right to enact acts like RERA. Such law would override acts and rules implemented by the states. Among the gross violation of RERA by the states, the report mentioned definition of ongoing projects and penalty on the builders for poor quality of construction. It has recommended that the central government must ask states to either change their rules or make fresh rules. Also, the committee should be informed about the action taken on its recommendation.

What did Rajasthan do:-

Projects in which common facilities handed over to residents’ association or authorised agency have been included in ongoing projects.

Those projects which have sold 60% plots or housing units  or gave their possession.

The projects whose completion certificate have been issued by chartered engineer.

Even the projects who have applied for completion certificate to the competent authority have been consideredongoing projects.

If 50% development fee has been deposited.

If the competent authority has begun regularization of the projects.