RERA gives homebuyers better leverage in their dealings with builders

With the Real Estate (Regulation and Development) Act coming into effect from Monday, there is considerable hope that it will ring in much needed transparency in the real estate sector. Ever since the economic downturn deflated the real estate sector, leaving many homebuyers in the lurch, the need for a legislation that can address the concerns of hassled homebuyers was keenly felt. The grouse among homebuyers was that the consumer courts established under the Consumer Protection Act, which offers remedies for deficiency of service, were overburdened and did not offer timely redressal, or was tailored to meet the specific needs of the housing sector.

The Act provides a real estate regulatory authority in every state, under which developers must register their projects and place all details — including clearances, site plans, advertisements and customer brochures — with the regulator. This will aid buyers in making informed decisions before investing, and expose builders who deliver less than what was promised. The legislation also prescribes penalties and jail terms, a dispute resolution mechanism for amicable settlement, and mandates that builders deposit all inflows from a project into a separate bank account to prevent diversion. However, there is no guarantee that overstretched or ambitious builders will not withdraw amounts for other purposes as there is no requirement for permission from the authority for withdrawal.

Despite the criticality of the provisions of the Act, only 13 states have notified rules that will make it operational. This is either a case of administrative sloth or a manifestation of the clout of the builder lobby. However, the state governments that have gone easy on notifying the rules are in danger of facing public reprobation. The middle class, which comprises most homebuyers, are not taking it lying down anymore and are hauling builders to courts and police stations for failing to meet their commitments. Some of the top builders have been arrested or hauled to court because of complaints lodged by irate buyers.

Builders shouldn’t be wary of this law. It is an opportunity to infuse professionalism in the sector and revive the industry, which has been in terminal decline from 2012. Builders have only themselves to blame for spreading their resources thin among multiple unfinished projects and the huge unsold inventory. Banks also contributed to the speculation by liberal access to credit. States must ensure that the regulatory authority can function smoothly and does not turn out to be a disappointment for consumers.

Source :- DNA