States hold key in making real estate law work

The much awaited Real Estate (Regulation and Development) Act, 2016 came into force on May 1 setting in motion the process of making necessary operational rules and creation of institutional infrastructure. Last week, the Ministry of Housing & Urban Poverty Alleviation (HUPA) notified 69 of the total 92 sections under the Act, which is aimed at protecting consumers and promote the growth of real estate sector.

As per the notification, both Central as well as state governments have to frame rules with in a maximum period of 6 months—by October 31, 2016. While the ministry of HUPA would make rules for Union Territories without legislatures, the Ministry of Urban Development would do it for Delhi. A committee headed by Nandita Chatterjee, Secretary, HUPA, has been constituted to formulate model rules under the Act for the benefit of states and UTs so that they could come out with rules at the earliest besides bringing uniformity across the country.

Notification also paves the way for state governments to establish an authority which will be known as the Real Estate Regulatory Authority within 1 year to exercise the powers conferred on it and to perform the functions assigned to it under this Act from the date of notification (May 1). Before establishing the authority, the governments have to designate an officer, preferably secretary of the department dealing with housing, as the interim Regulatory Authority. 

The time line for setting up of the Real Estate Appellate Tribunals will be a maximum period of 1 year – by April 30, 2017. These fast track Tribunals are to be set up to decide on the disputes over the orders of Regulatory Authorities in 60 days time. “With certain sections of the Act notified by the Centre, now the states have to act quickly to set up an authority and the tribunal before the rest of the Act brought in force on May 1, 2017. If states fails to do so, public can take them to the court,” said a senior government official from the HUPA.

Now, the first few set of sections in the Act have been notified. The remaining 22 sections will be notified soon which mainly relate to functions and duties of promoters, rights and duties of allotees, prior registration of real estate projects with Real Estate Regulatory Authority, recovery of interest on penalties, enforcement of orders, offences, penalties and adjudication, taking cognisance of offences, said the official.

No doubt, early setting up of the Real Estate Regulatory Authority, where all real estate projects have to be registered and appellate tribunals for adjudication of disputes, will help the consumers. However, one has to see how strongly the proposed regulators are able to perform their functions and how quickly do they address home buyers’ grievances. The success of the Act is also will be with the state governments as to the steps they will take for the effective implementation at the grass root level as well as providing better infrastructure.

Apart from establishing of the regulator and other infrastructure, seamless approvals for the real estate projects by various governmental bodies, including municipal authorities are also important to for the growth of the sector.

At present, around 40 to 120 approvals are required from different authorities for starting a project whether it is from municipal administration, fire services, Airport Authority of India, Archaeological Survey of India or environment and forests ministry.

Unwanted approvals
Though many states have started scrapping unwanted approvals, real estate sector had been demanding that there should be time frame for every permission. “The government must bring administrative reforms to streamline the approval system,” said Getamber Anand, President, Confederation of Real Estate Developers’ Associations of India (CREDAI). During the preparation stage of the new law, the real estate lobbies wanted the government authorities including municipal bodies, which sanction the projects, to be brought under the Act.

Admitting that they were concerned from the developers over the delay in getting approvals, Urban Development and Housing Minister Venakaiah Naidu says his ministry would soon hold a meeting with the state governments to discuss the early approval of the projects.

The Centre has been prodding the states to grant early permission to cut down delay in the execution of the projects and recently, the government also released a set of model building byelaws which provide a structural  framework to help create an online single window building plan approval process.

The Centre is planning to bring all construction-related procedures and approvals online by May end and with this, the ease of doing business is set to improve, says Naidu. “Our aim is complete elimination of human interaction – of the applicant with the urban local body – including online approvals of various kinds of no-objection certificates. The time limit for approvals proposed in the model regulations will be 30 days maximum, else it will be deemed to have been approved,” he said while explaining the government’s plan in streamlining the system.

The Urban Development Ministry introduced model building bylaws for Delhi which envisages single window clearance and payment system with approval of building plans within 30 days. “While the government will place initial blocks for a regulator in the Indian real estate sector, it is imperative that all cities adopt a single-window clearance system for construction projects in order to build developer confidence” said Sanjay Dutt, Managing Director, India, Cushman and Wakefield.

As the real estate sector is a state subject, the Centre can only suggest it and it is up to the state governments to adopt it. However, Naidu is confident that he would be able to convince the states on these issues. He said even in 20014, his ministry had issued model building byelaws, which were accepted and used by most states and Union Territories.