Is three months too long for a government to notify rules for implementation of the Real Estate (Regulation and Development) Act (RERA)? The Act, which is expected to regulate real estate development in the country and protect buyers from bad apples in the industry, came into effect on Monday. But, it will remain a paper tiger if State governments do not notify rules. Till date only 13 states have rules in place, but they are so diverse that most real estate watchers feel they will dilute the act instead of giving it teeth.
Goa is a real estate bonanza. It has a mixture of renowned companies who have been at it for decades, fly-by-night operators, small entrepreneurs who develop a few plots and then run out of steam, and of late big players from outside the state have entered. Over the years the industry has created standards and many companies are voluntary members of the Confederation of Real Estate Developers’ Associations of India (CREDAI). This organisation sets stringent construction standards and anyone who is a member has to follow these standards and rules. So, in a way, the absence of a regulatory body forced developers to band together to create one. CREDAI standards have served India well, but the problem is not everyone wants to be a member and follow the accepted standards. This ambiguity will now go away with the entry of RERA. Now, everyone who wants to build apartments will have to get registered with a regulatory body set up by the government. The entity will have to also make accounts of the project transparent. Diversion of funds from one project to another will not be allowed. Builders will no longer be able to sell on the basis of superbuilt-up area. Instead they will have to display the carpet area.
There is a list of sections aimed at regulating the business and protecting buyers, but the issue here is whether the real estate lobby is strong enough to dilute the rules to its advantage. And the answer to that question is ‘yes’. The present State Cabinet is packed with ministers who have some connection or the other to the industry and this could prove detrimental to the buyer. The Town and Country Planning Minister Vijai Sardesai has promised to bring out the rules in three months. Can we or should we take this deadline as real? The government might have good intentions, but one must not underestimate the power of the industry. What we would like to see is a Cabinet decision on which department is responsible for framing rules. Secondly, the draft rules must be made public and discussed in an open forum and suggestions incorporated. There isn’t another way of ensuring that the spirit of the Act is reflected in the rules. Anything less will be construed as a sell out to the real estate lobby.
