Analysis | Real Estate (Regulating and Development) Act 2016

Analyzed report of real estate regulating and development act 2016, to understand its various aspects, this is the critically analyzed report

AZIM PREMJI UNIVERSITY

INTERNSHIP IN COLLABORATION WITH INDIAN HOUSING FEDERATION, BENGALURU

Sachinkumar Rathod

1

Azim Premji University, PES Campus Pixel Park, B Block, Electronics City, Hosur Road, Beside NICE Road, Bengaluru, Karnataka 560100.

1 https://realestatetimes.in/node/6

Act analysis- Real estate (Regulating and Development) Act 2016 2

As a student of Public Policy and Governance at Azim Premji University, I got an opportunity to

intern at Indian Housing Federation for an affordable housing project. This is an analysis report

on recent, The Real estate (Regulation and Development) act, 2016.

The Structure of the Report: This analysis report is divided into 6 parts. The first part is an

introduction of my study analysis report. The introduction deals with rationale and objective of

the analysis report. Part 2 of this report will attempt a framework of this act, where this act

does belong to? Out of three parts of government (legislative, executive and judiciary) which

institution is responsible for implementation of RERA? It also talks about two out of three axes

of government functions, and these are the main role of government (regulating, development

and welfare). Part 3 of this report will describe nature of the functions that RERA act perform.

In this section I have answered the questions; what kind of regulatory and development does it

do? What kind of activities does it regulate and develop? What group of actors (citizens,

developers, officials, and institutions) that seeks to regulate and develop? And finally what is

the nature of regulation and development. Part 4 of this report consider a quick overview of the

current track record of this act. What is the status of the state governments in terms of

constituting the state regulatory authority? Which are the states have missed the deadline for

notifying the rules under this act? And what are the challenges and limitation before it? Part 5

of this report deals with understanding, how other state acts are dealing with real estate

matters? And can there be a better model set up to perform the functions this institution

currently perform. Part 6 of this report will conclude this paper.

I. INTRODUCTION

After eight years of struggle, Real Estate Regulating and Development Act, came to force on

May 1st, 2016. Every citizen of the country has the right to live in dignified and peaceful life.

When there is a gap in the system, high levels of misuse and the exploit will take place. It is the

2https://www.google.co.in/url? sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjgpKOujbzQAhWEtI8KHYyfCcYQFgghMAE&url=http%3A%2F%2Fwww.indiacode.nic.in%2Facts-in-pdf%2F2016%2F201616.pdf&usg=AFQjCNEfl-30dPEDNLTh2rQZcJeCUTO8wg

fundamental obligation on the state to protect, respect and fulfill the rights of every citizen of

the country. To make society peaceful and prosperous, the state should bring eight elements of

good governance that are, the rule of law, accountability, transparency, effectiveness and

efficiency, responsiveness, consensus oriented, equity and inclusiveness, and participation.

Thus, to make real estate more transparent and accountable to buyer/consumer, the

government of India finally passed this act in May 2016. Under ambit of consumer protection

act, 1986, real estate matters were dealt. As we know the real estate sector is one of largest

sector of the economy, it had required a separate authority to giving them full independent

power and make them sufficient/resourceful enough to regulate and develop the sector.

Consumer protection act was handling multiple issues and could not able to address this kind of

sectoral appliances.

This analysis report will decode this legislation in terms of more comprehensive clarity among

developers, consumers, agents, parastatal bodies, and organizations which are working in this

direction. My analysis report on real estate (regulation and development) act, 2016 is

significant because most of the stakeholders are not well aware of this act. There has been a

debate on this act, since when this act come to force, that whether this act will encourage

buyer as well as developers or not. Many developers have this anxiety that this act makes the

real estate sector a reduced amount of investment and dwindling. To answer the ambiguities

and lack of clarity I have analyzed this act through various set of questions for providing a clear

understanding of RERA.

Understanding any legislation entails you to use several angles. These angles might either

through questions or through picking few facts from the act itself. As far as my analysis act is

the concern, I have outstretched and attempted through multiple angles [3].

Table 1: Definitions of stakeholder

01 Allottee Allotee in relation to a real estate project means the person to whom a plot, apartment or building, as the case may be, allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter.

3 Example; governance framework, buyers, developers, policy perspectives, etc.

02 Promoter A person who constructs or causes to construct an independent building or a building consisting of apartments, or converts an existing building or a part therefor into apartments, for the purpose of selling.

03 Agent A person who negotiates in a transaction of transfer of his plot, apartment,

or building.

04 Regulating

authority

Regulating authority constituted at the state level to regulate real estate

sector.

05 Appellate

tribunal

“Appellate tribunal” means the real estate appellate tribunal established

under section 43.

Graphic 1: Timeline of legislation

The above process graphic chart shows the timeline of this legislation from tabling in the

upper house (Rajya Sabha) to establishing regulating authority.

II. Framework of governance:

A) Where does this RERA act belongs to? (Constitution of the authority)

Real Estate regulating and development act is a statutory act which is enacted by the parliament

to enter into the new way of a sectoral regulatory appliance. When the bill placed in the

parliament a few parliamentarians reacted, saying that real estate/land is a state subject Central

THE BILL WAS PASSED BY THE RAJYA SABHA ON 10TH

MARCH, 2016

BY THE LOK SABHA ON THE 15 MARCH 2016

THE ACT CAME INTO FORCE FROM 1 MAY 2016 WITH 69

OF 92 SECTION NOTIFIED

THE CENTRAL AND STATE GOVT ARE LIABLE TO

NOTIFY THE RULES UNDER THE ACT WITHIN A

STATUTORY PERIOD OF SIX MONTHS

THE AUTHORITY SHALL, WITHIIN A PERIOD OF THREE MONTHS OF ITS

ESTABLISHMENT, BY NOTIFICATION, MAKE

REGULATIONS

government don’t have the constitutional power to the enactment of legislation on the state

subject and it is the over breach of constitutional power by the central government. The RERA

however, has been enacted by the Central government by the power vested in it the virtue of

entries 6 and 7 in the list III (concurrent list4) of the seventh schedule of the constitution dealing

with contracts and the transfer of property [1]. Both the state and Centre can make legislate on

matters under the concurrent list, and article 254, clause (2) of the constitution specifically

provides that central laws will prevail over state laws on the matter in the concurrent list5.

Out of three parts of government, the executive is responsible for implementing this act. State

level regulating authority is constituted by the state government. Judiciary has the one

representative in selection committee but the majority say leaving with an executive member and

an independent eminent person, and that eminent person is appointed by the state government.

The State government might use this flexibility in appointing the members and chairman in terms

of misusing the power.

Traditionally, the state has three major roles to play. These are, regulating, development, and

welfare. Out of three axes of government, two roles have been brought in this act. This act has

two crucial starring roles, regulating and development. It regulates the real estate sector, within

that it regulates developer, agents and finally consumer. When it comes to development aspects,

it makes real estate sector more transparent, efficient and professional to grow in healthy, legal

and level fielding manner.

III. Nature of the functions that RERA act perform:

As the title suggest the Real Estate (Regulating and Development) Act, it establish the real estate

regulatory authority for regulation and promotion of real estate sector and to ensure sale of plot,

apartment or building, as the case may be, or sale of real estate project, in an efficient and

transparent manner and to protect the interest of consumer in the real estate sector and to

establish an adjudicative mechanism for speedy dispute redressal and also to establish the

appellate tribunal to hear appeals from the decisions, directions or orders of the Real Estate

4 Entry 6 of the concurrent list talks transfer of property other than agriculture land; registration of deeds and document. And entry 7 of the concurrent list talks about contracts including partnership, agency, contracts of carriage, and other special form of contracts, but not including contract relating to agriculture land.

5 The constitution of India, article 254, (P.M Bakshi, page number 251)

Regulatory Authority and the adjudicating officer and for matters connected therewith or

incidental thereto [6].

Under this act, every appropriate government shall constitute a regulatory authority, within a

period of one year from the date of coming into force of this act by notification [7]. There is also

a provision provided, in case two or more states or union territories may, if deems fit, establish

one single authority. The further appropriate government may, if it deems fit, establish more than

one authority. As there will be a delay in constituting the state regulating authority till than

respective government shall designate the power of this act to any regulating authority,

designated officer, or any appropriate department dealing with Housing, as a regulating authority

for the purpose of this act[8].

Graphic 2: Process, Composition, and Qualification of Authority

6 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

7 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

8 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

Establishment of Regulating Authority within period of one year from the date of coming into force this act , by notification

The Authority shall consist of a chairman and not less than two full time memebers appointed

by the government

Selection Committee constist of the Chief Justice of the

High Court or his nominee, Secretery of Department

dealing with Housing and the Law secretery

As far as the appointment of members is a concern, the respective government shall appoint one

chairman and two full-time members. These members and the chairman shall appoint with the

recommendation of a selection committee consisting of the chief justice of high court or his

nominee, the secretary of the department dealing with housing and law secretary. Beholding into

this committee’s composition it is clearly noticeable that role of government in appointing the

chairman and members are leading. Judiciary here only can express the name of the respective

member. But the final say may rest with the appropriate government.

A. Group of actors that seeks to regulate & develop:

This act has broadly covered all the stakeholder in its ambit of regulation and development.

These group of actors is, first, developer most important entity, who is also a supplier of

proposed project to the consumer. State regulating authority regulates developer’s functions and

duties. Second, consumer, who is the pivotal point here. Thus, in one hand authority have to

protect the rights of the consumer and another hand it makes them comply with rules and

provisions of the act. Third, the land is the state subject and to ensure efficiency in the real estate

sector, regulating authority is to provide/facilitate for clearances of land acquisition, and required

document clearance from the state’s parastatal bodies/institutions (single window clearance). For

instance, Bangalore electricity supply company Ltd (BESCOM), and Bengaluru Water and

Sewerage Board (BWSSB), etc9. Fourth, the regulating authority shall regulate agents under this

legislation. Every agent shall make an application to the authority for registration. Last but not

least, The Real Estate “Appellate Tribunal” looks into an appeal made by both consumer and

developer after decision or order made by the Regulating Authority.

Graphic 3: Group of Actors

9 Bengaluru Mahanagar Palike Building bye laws 2003 (government of Karnataka)

B. Regulatory & development function

This act provides power to regulating authority to bring clarity for both buyers and promoters

and provides level playing field to both parties to achieve their preferred goal. Under this act,

both parties, as well as agents shall be liable to follow the certain legal provisions. These are as

follow, no developer shall advertise, market, book, sell or offer for sale, or invite persons to

purchase in any matter any plot, apartment or building, as the case may be, in any real estate

project or part of it, in any planning area, without registering the real estate project with the Real

Estate Regulating authority established by under this act [10].

However, if any ongoing projects without having the completion certificate, the promoter shall

make an application to the authority for registration of the said project within a period of three

months from the date of commencement of this act. Further, if the authority thinks necessary, in

the interest of the consumer, for the project which is developed beyond the planning area but

with the required permission with parastatal bodies, (eq. BESCOM, BWSSB etc.) may order for

such project to register under the authority and provisions of this act [11].

10 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)11 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

Group of Actors/stakeh

olders

Authority

Consumer

Developer

Agent

Appellate tribunal

Parastatal bodies

Under this act, the areas of land which are less than five hundred square meters or a number of

apartments proposed to be developed do not exceed eight apartment, registration of real estate

project shall not be required. The rationale behind not including this kind of proposed areas was

that it will be very difficult and not as much of cost effective to register. When parliamentarians

were debating on this provision, had expressed their ambiguous and concern that it will lead to

exploitation. And it is clearly comprehensible that such a provision may lead to the construction

of smaller plot project within the 8 sq. meters (5.380 sq. feet). It needs to be seen in conjunction

with the building by-laws and land use plans. And also needs to be seen in conjunction with the

“act of making cities” or “creating the built environment”. In the present context, when

enforcement and regulations are weak and illegal constructions are rampant, this may lead to

smaller plots making 7 apartment.

Though, in this legislation not only central government had tried to bring uniformity among the

state and union territory in terms of real estate sector regulation and development but also it has

given freedom to state in the certain provision to make changes in the rules and regulation for

implementing this legislation depending on the ground reality and context. For instance, an

appropriate government which notifies the rules under this act may consider it necessary, it may

reduce the threshold (related to 8 sq. meters provision) below of subsection (2), (a) of section

(3)12.

C. What kind of activities does it regulate and develop?

First, this act aims to bring transparency and efficiency in the real estate sector, it enforces on

every promoter to enclose all the documents along with the application produce before the

authority. Thereafter, the authority will post this data on its website so that buyers can make

informed decisions. Under this act, the developer has to come up with his/her sanctioned plans,

layout plans, along with specifications, approved by the competent authority document before

the authority. The developer can’t show anything which is not there in proposed plan. They have

to be realistic and professional, as far as their functioning culture is the concern. They can’t show

development plan which is not able to produce them. Whatever they could able to deliver to the

buyer, that item shall have to be mentioned in the project proposal plan document.

12 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016 (Page number, 7)

As far as development of real estate sector is a concern, it does make real estate sector more

investment friendly through its principle of transparency and efficiency into real estate sector for

the long run but in short run, there might be a slowdown or incremental change in the sector.

Further adding, recent development in Indian currency system might harm more than any sector

(demonetization of 500 and 1000 rupees notes). Many economists are predicting that this move

in the economy would slow down and the expected to demoralize the real estate sector the most

as it deals with cash flow in the market day to day basis. The positive side of this decision is due

to less demand and decrease in inflation, prices of real estate projects will decrease in the market

and it will benefit the consumer.

Thirdly, it eliminates information asymmetry and ensures full and fair disclose via its web-based

[13]. For instance, as I mentioned above that developer can’t show anything outside the proposed

plan, here is the explanation for that, the authority shall operationalize a web-based online

system for submitting applications for registration of projects within a period of one year from

the date of its establishment [14]. Section 4, of the act, the authority shall within the period of

thirty-day grant registration and provide the registration number, including a Login Id and

password to the applicant for accessing the website of the authority and to create his web page

and to fill therein the details of the proposed project [15]. This function gives them to maintain the

database on its websites for public viewing of all the registered real estate project. The good

thing is, once developer or agent files application before the authority for registration, the

authority shall grant registration and provide the registration and login Id number and password

so that they can submit their detailed document for public viewing if the authority fails to do that

developer and agent automatically considered as registered. This provision will reduce the

corruption and red-tapism in the process. However, one thing has to be noted that as we have

seen in our state’s institutional efficiency, that if the registration application increases authority

might not able to handle the process within the stipulated time and that might be a worrying

aspect. Because it will lead to failure of motives of this legislation.

Graphic 4: Key Features

13 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

14 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

15 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

D. Nature of regulations and development

This legislation covers all the aspects which are related to regulating the real estate sector. From

developer filling registration application to grievance redressal mechanism, it has systematic

sectoral appliances. In this part, I will deal with the process of authority in regulating the real

estate sector.

Once establish the regulating authority at the state level, every developer and agents have to

register with their plan of the project and other compliance. Thereafter, regulating authority will

decide upon the registration and issue a login Id to the developer within the stipulated timeframe.

When the developer gets clearance for a project he/she has to follow the guidelines very strictly.

The developer is responsible for all the obligations, responsibilities, and functions under the

provisions of the act or the rules and regulation made thereunder or to the consumer as per the

agreement for sale [16].

To decide the matters related complaints by any aggrieved person the authority shall meet at

such places and times so on so forth shall decide by a majority of votes by the member present

and voting.

Prior to this legislation, the consumer was filing complaints in the consumer protection forum

under the consumer protection act, 1986 [17]. It was available as a forum for buyers and sellers in

the real estate sector, and the resources were only curative and were not adequate to address all

16 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)17 http://chdconsumercourt.gov.in/consumerProtectionAct1986.pdf

Real Estate Regulating Authority and

Appellate Tribunal

Registration of all residential real estate

projects

Registration of real estate agents

Duties of consumer and developer Panalties

the concern of the buyer and sellers. RERA deals with all the issues with real estate sector. It has

full-time members to look into the grievances. It will be working similar to SEBI authority.

Unlike consumer protection forum, RERA will function two twin role, regulating the sector and

developing the sector through its wide and detailed provisions.

Graphic 4: Offenses, Penalties, and Adjudication

Table 2: Developmental activities of RERA

RERA facilitates the growth and promotion of healthy, transparent, efficient

and competitive real estate sector. It does following development activities [18].

18 Government of India, ministry of law and justice (The Real Estate (Regulating and Development) act 2016)

Offenses, Penalties and Adjudication

Developer/promoter If any promoter/developer contravenes the provision of section 3, he will punished which may extend up to 10% of estimated project cost. if does not comply with the order, decisions or direction issued underthe section (1) or continues to voilets the provision of section 3, shall be punishable with imprisonment for a term which extend up to three years or with fine which may extend up to a further ten percent of the estimated cost of the project........

Real Estate Agentif any real estate agent, who fails to compy with, or contravnes any of the orders, decisions or directions of the Appellate Tribunal, he shall be punishable with imprisonment for a term of which may extent up to one year or with fine for every day during which such default continues, which may cumulatively extend up to ten percent of the estimated cost of the project.....

Allottee/consumerif any allottee, who fails to

comply with, or contravenes any of the

orders, decisions or direction of the authority

he shall be liable to a panalty for the period

during whcih such default continues, which may

cumulative extent up to five percent of the plot, apartment or building

cost..........

a) -protection of the interest of the consumer, promoter, and real estate agent;

b) -creation of a single window system for ensuring time bound project approvals and

clearances for timely completion of the project;

c) creation of a transparent and robust grievance redressal mechanism against acts of

omission and commission of competent authorities and their officials;

d) measures to encourage investment in the real estate sector including measures to increase

financial assistance to affordable housing segment;

e) measures to encourage construction of an environmentally sustainable and affordable

housing, promoter standardization and use of appropriate construction materials,

mixtures, fitting and construction techniques;

f) measures to encourage grading of projects on various parameters of development

including grading of promoters;

g) measures to facilitate amicable conciliation of a dispute between the promoters and the

consumer through dispute settlement forum setup by the consumer or promoter

associations;

h) measures to facilitate digitization of land records and system towards conclusive property

titles with title guarantee;

i) to render advice to the appropriate government in matters relating to the development of

the real estate sector;

j) any other issue that the authority may think necessary for the promotion of the real estate

sector.

Functions 4th and 5th of the regulating authority says, it may take measures to encourage

investment in the real estate sector including measures to increase financial assistance to

affordable housing segment and construction of environmentally sustainable and affordable

housing, promoting standardisation and use of appropriate construction materials, fixtures, fitting

and construction techniques [19]. As prime ministers ambitious mission, Prime Minister Awas

Yojana aims at providing affordable housing to all by 2022, this authority is also one of the

stakeholders which contributes in making this mission achievable. This function of the authority

is significant and rationale because without having expertise in housing segment authority might

fail in fulfilling the legislation’s goal. Nevertheless, no detailed process has been mentioned in

this legislation regarding how this authority will assist and encourage the affordable housing

segment.

IV. Overview of track record of the regulating authority

When this act came into force on May 1st, 2016 and states were asked to formulate rules and

regulation within the period of six months which ends on 1st October 2016[20]. Except for

Karnataka no state and the even central government has failed to meet the deadline. A Recent

newspaper report suggests that the builder lobby is pushing very hard to keep government not to

notify and constitute the authority. There are few states which have published their draft

notification after the deadline had ended. These are Gujarat, Uttar Pradesh, Madhya Pradesh and

union territories. As far as regulatory authority is a concern, states and union territories have to

be put in place by April 30, 2017, a day before the full act is brought into effect. Chandigarh has

set up a temporary regulating authority, which makes it one of the first in India to do so[21].

Karnataka in its draft rules for RERA has brought out detailed rules in the rate of interest payable

by the developer and consumer and timeline for refund. It says the rate of interest payable by the

developer to consumer and vis-versa shall be the state bank of India prime lending rate plus two

percent. And timelines for refund is forty-five days. Whereas Uttar Pradesh has only able to

mentioned about timelines for the refund which is forty-five days. Gujarat and Madhya Pradesh

19https://www.google.co.in/url? sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwiUtK7KjrzQAhXBr48KHQDMCi8QFggbMAA&url=http%3A%2F%2Fwww.pradhanmantriyojana.co.in%2Fpm-awas-yojana%2F&usg=AFQjCNGTdymcjmHWZWJZyB1qQeKM196z1g

20 https://news.housebolo.com/karnataka-published-draft-rules-for-rera-first-state-to-meet-centres-deadline/

21 http://timesofindia.indiatimes.com/business/india-business/Builders-to-pay-10-9-interest-for-delay-in-house-delivery/articleshow/55174510.cms

state’s notification is very short and nothing especially differs with central rules. Karnataka has

70 -page detailed rules than central rules.

Kerala has established the regulating authority much before this RERA came to force. It

established on February 25, under the Kerala real estate regulating and development act 2015[22].

The current chairman is Ajaykumar who was working with the Town and Country planning

department.

A) The limitations and challenges before RERA

Experts are in the opinion that this act lacks in the manifold. First of all, it lacks in the

appointment of a chairman. Appointment of chairman is left with state government. There is this

anxiety that state government may abuse this provision as I discussed above after seven months

very few states has come up with their draft rules. The states might go under developers lobby

and relax the rules for RERA.

Graphic 5: Limitations and Challenges

Secondly, there are no provisions in the act regarding the state parastatal bodies (example,

NWSSB). How they have to work with regulating authority and so forth, because ultimately

clearance has to be given by the local bodies.

Thirdly, this legislation is only applicable to those project which is built on more than 500 sq.

metres. Cities like Mumbai can be the destiny for using this relaxation.

22https://www.google.co.in/url? sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwj17Iqqj7zQAhVHpY8KHfBaC6EQFggdMAA&url=http%3A%2F%2Fwww.rerakerala.org%2F&usg=AFQjCNGUH-hGQfQN8GqHWrCGyXu51kcdaQ

Appointment of chairman and

Memebrs

No inclusion of local bodies

Only applicable to projects which are more than 500 sq

metres

Lack of clear land titles

Seeks to regulate only residential real estate and Prevelence of black

money

Fourth, this act lacks in defining the land acquisition matters because land is state subject, to get

clearance developers are facing a problem like a red-tapism, bureaucratic hurdles, etc.

Fifth, this act seeks to regulate only residential real estate. Commercial real estate is left out from

this legislation.

Lastly, as we know that when we talk about real estate, we generally understand that there is

huge black money is prevalent in this sector. To tackle this problem there is no provision in the

act. Moreover, it will wait and watch policy when we have a provision like 70% of the project

fund should be deposited into the bank and so forth.

V. Comparison with state legislation:

Even though RERA is strong and comprehensive and will be progressive legislation when it

comes to penalties, approval, protection of the consumer, there are certain state laws are

wider and ambit. These are as follows;

“Real estate project above 500 sq. metres or 8 apartments are covered under RERA, whereas

the Maharastra housing (Regulation and development) Act, 2012 (MHRD, presently repealed)

covered real estate above 250 sq. metres or 5 apartments, and had greater outreach. Similarly,

the West Bengal legislation covered all real estate projects. Which RERA gives respective state

governments the power to reduce the above-mentioned threshold, however, the central

legislation could have provided for covered of all kind of real estate with the power to state

government to adjust it based on their state-specific market reality and needs”[23].

“RERA requires that 70% of the amount received must be kept in a separate escrow account and

drawdowns from this amount are linked to completion of construction (only for land and

construction cost). On the other hand, MHRDA provided that all amounts received towards the

project must be kept in a separate account and the promoter is required to make full disclosures

on all transactions from that account. The state government do not have the liberty to amend

this requirement, and in our view some flexibility should have been given to state government

23 http://www.hindustantimes.com/real-estate/does-rera-have-an-overriding-effect-on-state-laws/story-gflTANpWZd6hpa1cWIQj8K.html

to amend this requirements based on the need to give the necessary thrust to the real estate

market in their respective states”[24].

Table 3: Comparison of central law with two state laws

Central laws West Bengal law Maharashtra law

1) Separate Regulating

authority

2) Mandated 70% (or less

as determined by the

state government

depending on reality

and context) of the

funds collected from the

consumer used for the

only construction of the

project.

3) Mandated 70% of the

funds of the project

deposited in separate

bank account.

4) Residential real estate

above 500sq metres and

8 apartments required

registration.

5) Required Registration

of all real estate agents

1) Has delegated this

function to a government

department[25].

2) All real estate projects

required registration.

3) Agents: no such

provision.

4) Appellate tribunal:

authority prescribed by

the state government.

1) Maharashtra housing (regulation

and development) act 2012

mandates that entire amount

collected from the buyers be kept in

a separate bank account[26].

2) Maharashtra: Residential real estate

projects above 250 sq meters and 5

apartments required registration.

3) Registration Agents: no such

provision.

4) Housing appellate tribunal

24 http://www.hindustantimes.com/real-estate/does-rera-have-an-overriding-effect-on-state-laws/story-gflTANpWZd6hpa1cWIQj8K.html

25 West Bengal Building (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993.

26 Maharashtra Housing Regulation and Development Act, 2012,https://www.maharashtra.gov.in/Site/Upload/Acts%20Rules/English/Housing_Act29314.pdf, Draft Haryana Real Estate(Regulation and Development) Bill, 2013, http://tcpharyana.gov.in/Tentative%20Draft%20Bill%2014.02.2013.pdf.

VI. Conclusion

The real estate sector was poorly regulated and developed in India. Lack of transparency

causing huge loss to the buyer as well state institutions. To eliminate the information

asymmetry and exploitation, finally under central government support we passed the

legislation in March 2016. No legislation will be successfully implemented until and unless we

execute it honestly. The initial stage of the implementation will be muddling through, once it

transforms incrementally and evolves over a period of time, it gets the shape and clear

understanding in the market. However, real estate is second of the largest employment creator

after agriculture sector and contributes 9% to GDP, if there is a delay in implementation of this

legislation, obviously, it will effect on the Indian economy, in general, urban growth and poor

employee worker in particular.

The Protection of consumer rights were dealt in consumer protection act, 1986. Regulation of

real estate sector was a challenging and difficult task for consumer forum. So to regulate this

huge sector an independent authority will be constituted. And this authority will do what

consumer forum was not able to do.

i Reference

i http://www.caclubindia.com/articles/real-estate-development-and-regulation-act-2016-an-overview-27092.asp 2. http://www.caclubindia.com/articles/real-estate-development-and-regulation-act-2016-an-overview-27092.asp 3. http://www.mcolegals.in/kb/Real%20Estate%20Act%202016%20-%20%20Buyer%20and%20Allottee

%20Meaning.pdf4. http://www.indiacode.nic.in/acts-in-pdf/2016/201616.pdf 5. https://issuu.com/fdcosta1990/docs/real_estate_bill_gets_a_green_signa 6. http://www.mhupa.gov.in/writereaddata/Real_Estate_Bill_rajyasabha%20.pdf 7. http://phjudgements.blogspot.ca/ 8. http://maharashtrahousingandbuildinglaws.com/the-real-estate-regulation-and-development-act-2016/