The Real Estate (Regulation and Development) Act (Rera) was implemented in May 2016 to regulate the real estate sector, where the need for transparency has been felt for decades. It was intended to control transactions and increase the builder’s responsibility for smoothly delivering what was promised. It was made mandatory to register the projects, open a separate account to deposit project receivables, disclose discretionary information and impose fines on compliance failure. However, the discrepancies are observed at every level where it fails to regulate but successfully penalizes on several occasions.
Multiple Approvals: There is no single window sanction system and developers have to go through several phases of approvals. For instance, if a developer seeks approval for a project in Delhi, he/she has to go through 41 permissions from the concerned authorities within a timeframe of 60 days. It makes the process unnecessary lengthy. Now, if the developer already has quite a few ongoing projects, timely delivery becomes almost impossible. Project delays also cause cost escalation.
Increases Debt: Developers are needed to keep aside 70% amount received from the customers in advance for a definite project and are not allowed to invest the amount in any other scheme, which limits their funding and they are compelled to take loans.
Limited Options: Due to delay in the completion of projects, buyers are left with fewer buying options which restrict the flow of cash in the real estate sector. Condensed competition might increase the prices too.
Restricting Laws for Joint Ventures: A joint venture between the developer and landowner is discouraged by Rera by considering landowners as promoters. This might make the landowners reluctant to take up the responsibility and work with the developers.
RERA fails to regulate the real estate sector on several parameters, and we come across many cases where RERA has been on a penalizing spree for not following the norms. In September this year, The Tamil Nadu Real Estate Regulatory Authority (TNRERA) penalized an amount of Rs. 1 lakh on two real estate companies who failed to register with the authority. 300 developers in Karnataka were sent notices for not having registered with RERA. Also, the Maharashtra Real Estate Regulatory Authority imposed a penalty of Rs. 1, 20, 000 on Sai Estate consultant misleading the consumers. Many states such as Goa, Kerala, West Bengal, and the North-Eastern States have not even notified the rules.