The full implementation of the Real Estate (Regulation and Development) Act 2016 (“RERA” or “Act”) in the year 2017 was widely considered to be a watershed moment in the growing real estate sector in India.
The Act was supposed to empower the consumers and make transactions in the property market fair and transparent for the consumers. However, a year into its implementation, the Act has not been able to fully realize its utility. This is due to various factors, significant amongst them being the selective interpretation by various stakeholders of the provisions leading to a confusion in the sector, as to its implementation in practice and the lackadaisical implementation of the Act by the various state governments.
As per a recent report, 25,000 projects have been registered across India, with Maharashtra alone accounting for 62 percent of the registrations. This clearly evidences the lopsided implementation of the Act, while on the other hand, clearly points to the fact that if there is a will to implement the regulations, the results can be very positive.
There have been positive developments as well in the industry which augurs well for the future, for example, the Act has been able to eliminate the practice of pre-launch offers by developers. Recent reports suggest that there has been an 8 percent increase in demand for housing in the first quarter of 2018. The Private Equity investments in the industry also have risen during the last year which indicates that investors view the implementation of this Act as a positive step forward.
Improvement of project execution and delivery has resulted in the partial revival of the residential segment of the industry. Provisions of the Act has forced developers to concentrate more on project delivery which has resulted in the availability of ready to move in home for the consumers. Redressal of disputes/grievances has also improved with access to forums becoming easier. The Government too has pitched in with subsidy on loans for affordable housing and also introduction of provisions in the Insolvency & Bankruptcy Code to protect home buyers.
The Act requires a concerted effort on the part of all the relevant stakeholders to ensure effective implementation in its intended spirit. RERA is a progressive legislation and its full implementation has the potential to impact the real estate sector in more positive ways than some of the recent steps taken. India will have a more stable, streamlined and transparent property market/sector if this Act takes full force and effect in its intended spirit.