Regulating an unregulated sector and bringing transparency in real estate deals has been the key focus of Real Estate Regulation and Development Act (RERA) 2016. The real estate regulator in Maharashtra – MahaRERA – has been a frontrunner in the implementation of the Act. Of the 20,000-odd projects registered, nearly 14,000 are from Maharashtra. Gautam Chatterjee, Chairman, MahaRERA, in an interview to BusinessLine , says that the regulation has brought a lot of confidence not just for buyers but also bankers and financiers. The regulator got a shot in the arm this week when the Bombay High Court upheld the constitutional validity of RERA, observing that it was crucial to protect the interests of flat buyers across the country and develop incomplete projects. Chatterjee explains the challenges faced by the regulator and its priority areas. Excerpts:
What has been your experience since RERA was set up earlier this year?
From the buyers side, it’s quite favourable and gives them a level playing field. Consumers are empowered with information about projects and builders. That gives consumers a platform to complain also. We have already passed about 250 orders on such complaints. Developers are also saying there is a comfort level as bankers are confident of RERA-registered projects.
We are only in the second quarter of implementation and next two to three years are crucial as we have to through this transition. The basic intention of this Act is to ensure that the projects are completed on time and that is why ongoing projects have been brought under this Act.
The Bombay HC ruling that ongoing projects must also be registered is a victory for the Authority but the order also allows developers to extend the timeline for completing a project due to delays caused by approvals etc.
Yes, the court ruling is a victory for us. We have over 14,000 projects which have been registered so where is the question of saying that it can’t be registered? Overall, there are only about 5,000 projects registered outside Maharashtra. The petitioners believed that the Act was too harsh on them and if the delay is due to an act of God, then extension should be granted.
The aggregate extension can be only one year. Act of God apart, acts of humans also delay projects. The statute gives discretionary powers to the regulator not to revoke registrations and allow them to complete projects in a time-bound manner on a case-to-case basis. So the court order does not change anything fundamentally.
Have you imposed a penalty on developers so far?
I do not think that is the right approach. Defaulting developers are being pushed to complete a project within a reasonable timeframe. This is the message we are sending to defaulting developers. Our objective is to ensure timely completion of projects so that buyers who have invested their money are protected.
If we take the approach of imposing penalties, the developer will leave the project as NPA. No one gains in that situation. Of the 1,053 complaints we have received, we have managed to resolve most of them amicably.
When will the positive impact of RERA start showing on the inventory which we presume is huge?
Inventory of projects is huge. Close to 50 per cent of the projects are still awaiting buyers. Consumers can now verify if a project is RERA-registered or not and over time, this will lead to improved sentiments.
Are you also looking at improving market sentiments?
Right now there are a lot of things on our plate. For us, the priority is to ensure that the 14,000-plus projects that have been registered are completed . Our aim is to ensure timely completion, remove inefficiencies and bottlenecks. That itself will lift the market up.
What is the total number of registration as we speak?
There are about 14,594 applications that have been received and of this 14,462 projects have been registered a total of 11,350 agents and a total of 1,053 complaints have been received.
How strong are you as an organisation to deal with such registrations and complaints?
Everything is online hence there is not much challenge. Not a single file comes as everything is digital. Right from project registrations to certificate generation is done online.
REITs don’t seem to be happening. Any discussion with SEBI on this?
No discussion with SEBI as yet. But entities which fund projects have been calling and asking. It gives them confidence that a big brother is watching. An unregulated sector being brought under a regulator will take time. The sector was opaque and you are trying to make it transparent.
How do you ensure that a developer is complying with your rules?
At present we are not doing policing. It is a business between two private players where one player never had any say but now both have a say. I don’t want to convert this into a red tape organisation. Suo motu provision is provided in the Act but when we will exercise it is a call we will take.
What is the biggest challenge that you see in the whole scheme of things?
Our data shows that over 7,000 projects have a time overrun which means that they should have been completed before the Act came into place. Just because they could not be completed, they came under the Act and our key role is to see that these projects are completed without further delay.
We have got 14,000 developers to get registered which has happened in no other State. This is because we told developers that regulation is not strangulation and it will bring comfort level to consumers and bankers also. We are talking of transparency, fiscal discipline, compliance and accountability and these are good for the industry. When we see non-compliance, we will certainly come down heavily on them.
Are these regulations enough to cleanse the real estate sector?
It is a learning curve for us. The aim of the regulation is to bring comfort to consumers.