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Analysis | Real Estate (Regulating and Development)Act, 2016

AZIM PREMJI UNIVERSITY INTERNSHIP IN COLLABORATION WITH INDIAN HOUSING FEDERATION, BENGALURU

30th November, 2016

SACHIN RATHODAzim Premji University, PES Campus Pixel Park, B Block, Electronics City, Hosur Road, Beside NICE Road, Bengaluru,

Karnataka 560100.

Outline of the Presentation

Introduction Where does this RERA belongs to? Key features of RERA Regulatory and development functions Appellate tribunal Overview of track record of the legislation Issues with RERA Comparison with two state laws Questions

Introduction The Real Estate (Regulating and Development act, came to

force on 1 may 2016. The objectives of this act are to bring transparency,

efficiency, professionalism and competitive in the real estate sector (eight elements of good governance)

Real estate problems were dealt under consumer protection act 1986 (Now RERA will look into the issues)

Seeks to regulate residential and commercial real estate This act enters into a new sectoral regulatory appliance The scope of this act limited to contracts between consumer

and developer These items fall under seventh schedule, (third list that is

concurrent)

Timeline of legislation

THE BILL WAS PASSED BY THE RAJYA

SABHA ON 10TH MARCH, 2016

BY THE LOK SABHA ON THE 15 MARCH

2016

THE ACT CAME INTO FORCE FROM 1 MAY 2016 WITH 69 OF 92 SECTION NOTIFIED

THE CENTRAL AND STATE GOVT ARE

LIABLE TO NOTIFY THE RULES UNDER THE ACT WITHIN A

STATUTORY PERIOD OF SIX MONTHS

THE AUTHORITY SHALL, WITHIIN A PERIOD OF THREE MONTHS OF ITS

ESTABLISHMENT, BY NOTIFICATION, MAKE

REGULATIONS

Where does this RERA belongs to?

What is the regulating authority “A regulatory body or regulatory agency  is a public

authority or a government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity”.

“Established by legislative act in order to set standards in a specific field of activity, or operations, in the private sector of the economy and to then enforce those standards”.

Regulatory agencies function outside executive supervision.

Conti- It is a Quasi judicial body which have power similar to

that of law imposing bodies but or not courts.

Making laws on real estate comes under concurrent list (246 (2), seventh schedule of the constitution)

Three axes of state (regulating, development and welfare)

Example: Telecom Regulatory Authority of India (TRAI), Security Exchange Board of India (SEBI).

Key feature of RERA

Real Estate Regulating

Authority and Appellate Tribunal

Registration of all

residential/commercial real

estate projects section 3 (1)

Registration of real estate

agents, section

Duties of consumer

and developer

Penalties

Carpet area/net

usable area

Process, composition and qualification of authority Establishment of

Regulating Authority within period of one year from the date

of coming into force this act , by notification

•

The Authority shall consist of a chairman and not less

than two full time members appointed by the

government

•

Selection Committee consist of the Chief

Justice of the High Court or his nominee,

Secretary of Department dealing with Housing and

the Law secretary

•

Group of actors/ stakeholders

Group of Actors/stakeho

lders

Authority

Consumer

Developer

Agent

Appellate tribunal

Parastatal bodies

Process of registration of projects

Registration of protect with RERA

Declaration of promoter

70% of project cost

must deposited in

bank account

No advertisement without

registration of project with RERA

Obligation of promoter for veracity of

advertisement

Regulatory and development functions Protection of the interest of the consumer, promoter, and real

estate agent (regulatory)

Single window clearance, timely bound project approvals (administrative)

Transparent and robust grievance redressal mechanism (judicial)

Encourage investment, increase financial assistance to affordable housing segment (executive)

Construction of an environmentally sustainable and affordable housing, (administrative)

Cont- Grading of projects on various parameters of

development including grading of promoters (administrative)

Facilitate amicable a dispute between the promoters and the consumer through dispute settlement forum setup by the consumer or promoter associations (judicial)

Digitization of land records and system towards conclusive property titles with title guarantee (administrative)

Advice to the appropriate government in matters relating to the development of the real estate sector (advisory)

Real estate Appellate tribunal Shall establish Within the period of one year from the

date of coming into force of this act

Shall consist of at least one judicial member and one administrative and one technical member

Any one may prefer an appeal before the tribunal (30% deposited)

Within a period of sixty days

Overview of track record of the legislation

Meeting the deadline (Karnataka)

After deadline (Gujarat, Uttar Pradesh, Madhya Pradesh and Delhi)

Section 4 (2) (b) details of cases pending (Delhi)

Chandigarh has put up a temporary regulating authority

Diluting the RERA rules (Gujarat and Uttar Pradesh)

Kerala has established the regulating authority much before the RERA under Kerala real estate (regulating and development) act, 2015

Limitations and challenges of RERA

Appointment of chairman and

MembersNo inclusion of local bodies

(s.3 (2a))Only applicable to

projects which are more than 500 sq metres

Opinion given by the authority is not binding on govt. (33.(2,3))

Prevalence of black money

Comparison of central law with two state lawsCentral law West Bengal Maharashtra 1) Separate Regulating authority 2)Mandated 70% (or less as determined by the state government depending on reality and context) of the funds collected from the consumer used for the only construction of the project.3) Mandated 70% of the funds of the project deposited in separate bank account. 4)Residential real estate above 500sq metres and 8 apartments required registration. 5)Required Registration of all real estate agents 6)Separate Real estate appellate tribunal

1) Has delegated this function to a government department

2) No such provision3) No such provision4) All real estate projects

required registration.5) Agents: no such provision 6) Appellate tribunal:

authority prescribed by the state government.

1) Housing regulatory authority

2) All amount collected from the project

3) Entire amount collected from the buyers be kept in a separate bank account.

4) Maharashtra: Residential real estate projects above 250 sq metres and 5 apartments required registration.

5) Registration Agents: no such provision.

6) Housing appellate tribunal

Questions What does the act attempt to give guidelines to the state? Can RERA fulfill the objectives of this ACT

Because land is the state subject

Does this legislation lead to increase in cost of price and ultimately burden on consumer?

Transparency, adjudication or corruption?

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