Report on housing projects submitted to MoHUA

Latest Context:

Recently, a committee on stalled housing projects submitted report to Ministry of Housing and Urban Affairs (MoHUA).

Key highlights of report:

• Around 4.12 lakh housing units (45% in NCR) worth 4.08 lakh crores are stalled.
• Main reason for stalled projects is the lack of financial viability (leading to cost overruns and delays).
• Finding a proper resolution to this issue will add more housing units and will give boost to economic growth.

Recommendations of the report are:

• Mandatory registration with RERA: To increase developers’ accountability for their actions and the commitments made to homebuyers.
• Rehabilitation Package: The state governments should provide some rehabilitation package to make stalled projects financially viable.

About the RERA (Real Estate (Regulation and Development) Act 2016

• It aims to regulate and promote transparency in the real estate sector.
• It was enacted by the Indian Parliament to bring accountability and fairness to the real estate industry, protect the interests of homebuyers, and promote timely completion of real estate projects.

Key features of the RERA are:

• Regulation of Real Estate Projects: RERA mandates that all residential and commercial real estate projects with an area of more than 500 square meters or more than 8 apartments must be registered with the respective state's Real Estate Regulatory Authority (RERA). This registration is meant to ensure that developers provide accurate information about the project to potential buyers.
• Disclosure of Information: Developers are required to provide detailed information about the project on the RERA website, including project details, layout plans, land status, approvals, timeline for completion, and details of the contractor and architect.
• Accountability and Transparency: RERA promotes transparency by ensuring that developers deposit a certain percentage of the project cost into a separate bank account. This account is meant to cover the construction costs and can only be used for that purpose. This prevents developers from diverting funds to other projects and ensures that the project is completed on time.
• Title of Property: Developers are required to have clear titles to the land on which they are constructing. This prevents fraudulent practices and protects the interests of homebuyers.
• Delays and Compensation: If there is a delay in project completion, the developer is liable to pay compensation to the buyers. Similarly, if there are any structural defects within a specific period after possession, the developer is responsible for the repairs.
• Real Estate Agents: The act also covers real estate agents, requiring them to register with the RERA before facilitating property transactions. This brings more accountability and professionalism to the agent-buyer relationship.
• Dispute Resolution: RERA establishes Real Estate Appellate Tribunals to address disputes between developers and buyers. This provides a faster and more efficient mechanism for dispute resolution.
• Promotion of Consumer Interests: The act primarily aims to protect the interests of homebuyers, ensuring that they receive what was promised by the developer and that their investment is secure.

Conclusion:

RERA has had a significant impact on the real estate industry in India. It has brought about more transparency, accountability, and professionalism to the sector. Homebuyers now have better protection against fraudulent practices and delays in project completion. However, the effectiveness of RERA implementation can vary from state to state, as real estate is a subject on the State List in the Indian Constitution, allowing each state to create its own rules and regulations within the framework of the central act.

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