Real estate developers are finding it challenging to comply with procedures laid down for registration of ongoing projects under the Real Estate (Regulation and Development) Act (Rera).
Consequently, not many projects have been registered under the Act so far. Developers have time till July 31 to register their ongoing projects.
Says Surabhi Arora, senior associate director, research, Colliers International India, “Rera compliance appears to be challenging for developers and promoters in the beginning, as it requires all approvals prior to registration. Secondly, the registration process is new for developers, which is why they are cautious and tentative in furnishing accurate estimates regarding their project and frame the required sale agreement.”
For example, only 11 builders and 700 real estate agents had registered in Maharashtra in three weeks after implementation of the Act, though there are over 50,000 projects that need to be registered in the state. But Maharashtra is the only state where the registration process has begun.
According to insiders in the real estate sector, builders are treading cautiously while sharing project information in public domain, as it is the first time they are doing so.
Rera regulations require all approvals to be in place before a project is registered with the real estate regulator.
Experts also suggest that the matter is being complicated by the unusually vast amount of information that is needed to be uploaded by project developers on their website.
Builders need to get certifications from architect, chartered accountant and sort- out compliance issues before uploading the information.
In addition, details of real estate agents and their registration numbers are also required.
Promoters are accountable for timely completion of the project and maintenance of project account. Therefore, developers are taking utmost care before registration and are invariably seeking legal advice before doing so, adds Arora.
Says Sahil Vora, founder and managing director, SILA “Projects are on hold, as developers cannot sell any stock until they have registered their project with Rera. They are all working on getting their compliances in order before restarting projects.”
Most developers have to therefore completely change the way they have operated in the real estate business so far. Internal systems and processes need to be changed to ensure they are Rera-compliant. This cannot happen overnight.
“ Moreover, some clarifications are awaited from officials on certain parts of the rules and act,” adds Vora.
“Every stakeholder must keep an open eye while assessing the rules of Rera,” says Dhiraj Jain, director, Mahagun Group.
Points out Manoj Chaudhary, director, Airwil Infra Ltd, “Rera, which is aimed at bringing more transparency into the entire system and avoid unnecessary delays and malpractices, involves all aspects such as land procurement, sale, purchase, construction and transfer of ownership, among others.”
Says Vikash Bhasin, MD, Saya Group: “Rera cannot disrupt the work of any developer or any buyer, but yes it is there to ensure that all business is conducted in a fixed pattern, allowing a level playing field to buyers and sellers.”
Homebuyers had celebrated the passage of Rera by Parliament last year. But the initial optimism seems to have faded away with states going slow on implementation of the Act.
Some states, including BJP-ruled ones like Haryana, have even diluted Rera provisions to the dismay of homebuyers.
Under Rera, builders are required to park 70 per cent of proceeds in an escrow account. While banks want to lend to builders, it is not clear how many times money can be withdrawn from the account in a month or in a quarter, sources in the real estate sector confided.
noor.mohammad@mydigitalfc.com