Centre makes rules for realty, even NDA-ruled states bend them

Maharashtra, MP exempt builders from disclosing changes, Gujarat keeps pre-November projects out.

Written by Shalini Nair | New Delhi | Published:December 30, 2016 2:11 am
real estate, real estate market, demonetisation, real estate sector, NDA, NDA government, urban development, RERA, real estate act, indian express news, india news, latest news The Ministry of Housing and Urban Poverty Alleviation notified its rules under the Real Estate (Regulation and Development) Act (RERA) in October.

THE landmark central legislation meant to regulate the real estate sector, brought into effect by the NDA government in May this year, is being diluted by five states, three of these ruled by the NDA, in their versions of the rules. And in Delhi, where land is a subject that comes under the Centre, it is the Union Ministry of Urban Development that has issued watered-down rules.

The Ministry of Housing and Urban Poverty Alleviation notified its rules under the Real Estate (Regulation and Development) Act (RERA) in October. The central rules are applicable to all Union territories without their own legislature and are meant to serve as the template for rules in other states.

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The latest state to issue its rules is Maharashtra, earlier this month. Over the preceding one month, similarly diluted rules had been notified by BJP-ruled Gujarat and Madhya Pradesh, besides non-NDA states Karnataka and UP. In Delhi, the urban development ministry has tweaked the rules made by the housing ministry; both ministries are headed by Venkaiah Naidu.

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The rules of all these states effectively favour real estate developers over home-buyers, for whose protection the Act had been formulated in the first place.

Sources said the Prime Minister’s Office has asked the housing ministry to submit a report this month whether the state governments have indeed violated central provisions. A spokesperson for the ministry said, “We are seized of the matter. States can make their own rules with variations as per local needs. However, they can’t deviate to an extent that it violates the parent Act. We will consult the law ministry to see in what way, even in a federal system, we can ensure compliance by the states.”

RERA requires all builders to register their projects, both ongoing and upcoming, with the newly set up state-level Housing Regulatory Authority and provide full public disclosure on the regulator’s website. Any contravention of the Act or fraudulent practices by developers can lead to revocation of the project’s registration and even a jail term up to three years for the builder.

Maharashtra’s RERA rules allow for project-related information not to be made available for public viewing on the regulator’s website.

Builders of ongoing projects only have to submit details of their last sanctioned plan, exempting them from revealing details of various plan changes and delays. It also legalises the practice where builders can sell open areas within a project as parking lots, though this was struck down by the Supreme Court.

“The central rules are not sacrosanct; we have followed whatever the Act states. There are thousands of ongoing projects in Mumbai, it is not possible to update all the information on those. Whatever is relevant from the consumer point of view will be made public,” said a Maharashtra government official.

The rules notified by Madhya Pradesh, too, allow builders of ongoing projects to keep under wraps details of several changes made to the original plan as also the extent of past delays.

Gujarat, meanwhile, has decided to make the regulatory Act enforceable only on projects launched after November 2016, thus exempting all ongoing ones. “There are not many home-buyers; [there are] disputes in Gujarat’s ongoing real estate projects which is why we have said that RERA will apply to only those launched after November 2016,” said Neela Munshi, Officer on Special Duty to the Gujarat government.

Data compiled by the real-estate research agency Liases Foras shows that home-buyers in 65 per cent of ongoing projects across eight cities — including Ahmedabad in Gujarat, Mumbai Metropolitan Region and NCR-Delhi — are staring at a delay ranging between a few months and over five years.

In Delhi, the rules issued by the Union ministry mandate that builders need to make public details of only the court cases against them that have been disposed of, without needing to disclose other pending litigation.

“UP and Karnataka have also tinkered with their rules to favour developers,” said Abhay Upadhyay, convener of Fight for RERA, a home-buyers group that has been campaigning for an effective real-estate regulation Act. Karnataka’s rules have made several concessions for builders with ongoing projects while UP has taken several ongoing projects out of regulatory body’s purview as well as decreased the penalty for offences.

“However,” Upadhyay said, “it is ironic that BJP governments at the state levels, and the urban development ministry in case of Delhi, have diluted the rules and central legislation enacted by their own party in the Union government. These changes will prevent buyers from making informed choices and help errant builders get away easily.”

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