RERA stands for real estate regulation and d evelopment act which was enacted in 2016. This act aims to the development of the real estate sector in the country and it includes not only residential estate but also commercial estates. Before the enactment of this act, the real estate in India was highly unorganized, underdeveloped and the interests of consumers were not protected and consumer protection was very unsatisfactory. Delay in completion and possession was also the major problem of the real estate sector. So, to resolve all these problems and issues and for the development of the real estate sector, this RERA act was enacted. This act aims to increase transparency and accountability in the real estate sector which led to boost the confidence of buyers, which finally led to an increase in the economy of the country.
IMPORTANT PROVISIONS PLAYING ROLE IN THE DEVELOPMENT OF ECONOMY
APPLICABILITY – this act applies to both residential and commercial estates.
RERA – the real state regulatory authority is established at the centre and state level. Every state has its separate regulatory authority which oversees the transactions that took place in that particular state and UT’s and act as a nodal agency to develop the real estate sector in the economy and to provide necessary advice and recommendations to the government.
REGISTRATION – the registration of every real estate project is mandatory which exceeds 500 sq M or if there is the planning of making more than 8 no. of apartments. And, if an agent intent to sell any property, plot, building, or apartment then the agent must register in the authority. Mandatory disclosure of all the information regarding the project like period, area, etc. by the promoter to the allottees.
COMPULSORY DEPOSITION OF 70% OF TOTAL FUNDS- According to this provision of this act, the promoter has to deposit70% of the total fund that is collected from the allottees in the escrow account of the bank. And the promoter can use these 70 % deposits only for the construction of that project for which money has been given, not for any other thing or project.
ADHERENCE TO THE DECLARED PLANS – Firstly, declared plans cannot be changed and if there need to do so then it requires a total of 2/3 of the majority of the allottees are agreed to make changes in the declared plans.
FASTRACK DISPUTE SETTLEMENT MECHANISM – Before the enactment is this act, the consumers approached the consumer courts to settle any disputes. But now under this act, RERA (real estate regulation authority) is established to settle the disputes of consumers regarding real estate and if the consumer is not satisfied with the verdict of RERA, then within 60 days the consumer has the option of appeal in the REAT (real estate appellate tribunal), and it has the power of civil courts and tribunal is responsible to settle the dispute within 60 days. So, there is no time delay for the consumers and therefore, it is called fast track dispute settlement mechanism.
CARPET AREA – under this act, the definition of carpet area is given which states that the developer can sell only the carpet area which means that the net usable space of that particular apartment and only this can be sold. So that the consumer will have a clear idea of how much space is there for the utility.
PUNITIVE PROVISION – This includes the penalties in case of any default or case of contravention with the provision of this act or the orders of the authority and the tribunal.
IMPACT ON ECONOMY
The real estate sector is an important contributor to the Indian economy and its significance increases after the enactment of the RERA act. Some of the key points which justifies this statement are as follows:
- The economic reconstruction and growth are dependent on the real estate sector as it contributes approximately 6.5% to India’s gross domestic product.
- By 2030, it is estimated that the market size of the real estate sector would be USD 1 trillion and by 2025, it will contribute approximately 13% to the GDP of India.
- For the year 2020, it was estimated that there was about USD 270 billion for the home loans making it a significant credit flow in the economy.
- In 2017, about 50 million people were employed by the real estate sector making it the country’s second-largest employer after agriculture.
COMPLETION OF THE PROJECTS
One of the most important impacts of the RERA act on the economy is about the terms of completion of the projects or possession of the projects. Delivery and completion of the projects become proper and on time without any delay. According to the research report conducted by Anarock, 220 projects account for over 1.74 lakh homes across the top seven Indian cities that were completely stalled as of 2019 in the given timeline without any delay. 10 states that are Gujarat, Karnataka, Madhya Pradesh, Telangana, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Rajasthan, Chhattisgarh, and Maharashtra have contributed 90% (65,202) to total project registrations. And from these Maharashtra covered 45% (29,510) of all India projects. Registrations done by agents were 51,303. And if I talk about complaints disposed of then seven states that were (Uttar Pradesh, Haryana, Maharashtra, Madhya Pradesh, Karnataka, Gujarat, and Tamil Nadu) contributed to over 90% (67,681) of the total complaints disposed and settled. So, an increase in registration, completion of projects, and complaints resolved led to the development and growth of the real estate sector directly link with the development of the economy of our country.
TRANSPARENCY AND ACCOUNTABILITY
As 70% of the total funds are deposited in the escrow account which led to the increase in accountability and transparency which build the confidence of the consumers to enter into the real estate sector. 27 states have developed web portals with the information available regarding the 110 parameters for the registered projects. So, all these factors increase the confidence of buyers, and this has increased the sales of real estate. An increase in sales concerning value as well as the volume of sales led to the development and increase in the Indian economy.
The impact of the RERA act is positive on the economy of the country. But due to demonetization at the same time, the sales of the real estate sector decreased due to which some negative impact was shown up in the economy of the country. And due to various penalties and understaffing, the launching of projects by the developers’ decreases, and there should be uniformity in the state and centre provisions because some states do not enforce the provision in their particular state act due to which contradiction for both developers as well as buyers occur and the state should try to create infrastructure which will create ease of doing real estate business.
Author(s) Name: Sakshi (Institute of Law, Kurukshetra University)