Impact of RERA on Real Estate Sector in next 10 years.
The real estate sector for the first time caught the attention of the law makers for the activities of unscrupulous promoters to enact the Real Estate (Regulation and Development) Act, 2016 ( RERA). There was complete resistance from the Real Estate promoters, but the interest of consumers compelled the law makers to enact RERA, effective from 1st May, 2017 across India. Any sector which has a regulator has seen the immediate set back and over the period of time, it has always helped the sector to grow systematically.
Real Estate (Regulation and Development) Act 2016 is a step towards reforming the real estate sector in India, encouraging greater transparency, citizen centricity, accountability and financial discipline which was completing lacking in this sector. Post RERA, the developers will have disseminate vital information of about clear title, approvals received, development potential, time lines for each activities including the project completion date. The control on the utilisation of 70% of the funds received from the allottees towards the land and the construction cost through three professionals i.e Architect, Engineer and the Chartered Accountants has ensured the financial disciple. In case, the developers fail adhere to timelines in project completion, the RERA in consultation with competent Authority is obliged to get the project completed through the association of allottees or otherwise. The penal provisions with huge penalty ranging from 5% of the cost of project till 30% of the cost of project was not acceptable to the promoters.
This had made nearly 40 developers association to challenge the constitutional validity of RERA under article 14 and 19 of constitution of India in different High Courts across India to stall its implementation. The Hon’ble Supreme Court on the petition of Union government directed the Hon’ble Bombay High Court to decide the constitutional validity within 2 months. The Hon’ble Bombay High Court in their 330 page judgment upheld each and every provisions of RERA and the justification for having such a regulation in the real estate sector. The RERA has been now tested judicially at various High Courts of India and also at the Supreme Court of India. The West Bengal Government had enacted its own “West Bengal Housing Industry Regulation Act” (WBHIRA) instead of implementing the RERA. The Hon’ble Supreme Court had set aside the WRHIRA and directed the West Bengal government to implement the RERA. Now across India, RERA is implemented in letter and spirit by setting up the Real Estate Regulatory Authority, Real Estate Appellate Tribunal, Adjudicating officers as per the provisions of RERA.
Post 7 years of implementation of RERA, the promoters, real estate agents, allottees and other stakeholders like land owners, financial institutions, competent Authorities etc, have seen the impact of RERA. This has helped the stakeholders to change their business process and adhere to new norms. The confidence and the trust amongst the allottees have increased. Only genuine promoters are in the real estate business. The fund flows has increased in this sector. In the next 10 years, the sector will be one similar to capital market which has seen the present growth post its regulatory set up through Securities Exchange Board of India(SEBI) through complete digital transaction. The real estate also has adopted the digitisation. Across India, RERA is functioning online including the hearings are held online. The integration of portal of planning Authorities, Registration of documents, land records with RERA portal will go a long way in protecting the interest of the allottees and facilitate the exponential growth in the sector.
REDEVELOPMENT AND SELF REDEVELOPMENT OF REAL ESTATE PROJECTS, A WAY FORWARD IN CITIES.
Development of multistorey buildings in cities used be the norms in the real estate sector. Having sustained the old multistorey structures for more than 4 to 5 decades in cities, a new trend of Redevelopment has started in tier 1 and tier 2 cities. To enable the Redevelopment, necessary incentive FSI (Floor Space Index) or FAR (Floor Area Ratio) are incorporated in the Development Control Promotion and Regulations by the government. The redevelopment takes place due to dilapidated and unsafe conditions of old buildings managed by the housing societies or Residential welfare Associations, Tenanted buildings, Slums, old chawls etc. In the process of Redevelopment, the existing owners/ occupiers get the new premises with moder amenities and facilities free of cost and the redeveloper gets necessary approval to construct additional areas which may be sold in the open market to recover the redevelopment cost and the profit. This is one of the best initiate of the government.
However, over the last two decade, it has been seen that in order to get the redevelopment contract, some of the unscrupulous promoters offer to the existing members/occupiers additional area over and above the existing area free of cost in addition to the corpus amount, displacement rent during construction period. This has lead to greed in the existing members/ occupiers who engage the promoters who fail to deliver what has been promised. This has trend has witnessed thousands of stalled projects across India. The differences in the existing members/ occupiers also sometime delayed the execution of the redevelopment and the disputes lands in the court. Similarly, the existing societies/ RWA also had to terminate the promoters for failure to pay the displacement rent, not completing the project in the agreed timeline and the disputes land in the court. This has created untrust amongst the existing members/ occupiers with the developer.
Therefore, an alternative methods of executing the redevelopment under self-redevelopment by the existing societies/ RWA is explored. The government also has started encouraging the self-redevelopment by offering number of incentives and streamlining the approval process under one window clearance. The concessions in the premiums, taxes, stamp duty with increased FSI/ FAR to the societies/ RWA undertaking self-redevelopment is now making existing societies/ RWA to explore self-redevelopment.
Now the time has come for the government to set up a separate regulator to regulate the self-redevelopment and Redevelopment projects by societies/ RWA or existing occupiers/ owners. Redevelopment has become necessary in urban areas and if the same is not controlled and monitored properly by the government by setting up a regulator, huge unrest may be seen in the sector. Unfortunately, the Real Estate (Regulation and Development) Act, 2016 has exempted from the registration and monitoring of the Rehab portion in the redevelopment project. This gap need to be filled to make this new venture to work in the right direction for the welfare of all.
This stupendous success was coupled with many other vital activities that were conducted behind the scenes. The Plantation drive to plant 98000 plants, geo-tag, nurture and sustain them was conducted since April 2022 and promoted on the World Environment Day on June 6, 2022. 34 huge Farm Ponds were constructed that helped sustain the local farmers during the harsh summer months and ameliorate the grave situation of the water-starved villages in the region, this summer.
This exemplary effort has been humbly dedicated to our Nation to commemorate the grand 75 years of Indian Independence- ‘Azadi ka Amrit Mohotsav”. The honest intent was also to endorse support for the project of ‘Gati-Shakti’, launched by our Honorable Prime Minister, Mr. Narendra Modi under the able leadership of Minister for Road Transport and Highways, Mr. Nitin Gadkari, for multi-modal, integrated and seamless connectivity, for the movement of people, goods, and services across our vast country.
Today, there are many challenges being faced by the highway sector such as ensuring availability of construction materials and machinery, timely completion of projects and availability and release of funding, availability of trained human resources, and addressing concerns on land acquisition, and safety. India has the second-largest road network in the world, spanning 5.89 million kilometres.
There will be a huge requirement of road construction materials to meet the targets of infrastructure development and meeting this requirement without adulteration or substandard quality of raw material, at the right time at the right price for the construction and maintenance of roads is in itself a huge challenge.
Our effort of aiming for the new Guinness World Record was not merely to win accolades or business expansion and growth.
I have always harboured this earnest dream to reach out to the aspiring youth of rural India and offer them opportunities to grow. I came from a rural background, and this is how far I have reached. I want to reach out to this segment of our youth and show them that the infrastructure sector is full of opportunities; it has rich prospects to break the barriers and offers great careers. I hope achieving such world records will just reinforce their faith that India is no longer a nation to feel hopeless about, and seek jobs overseas.