Real estate regulatory authority(RERA)
Real estate regulatory authority(RERA) is an effective regulation to eliminate malpractices and revive end-user sentiment in housing sector.
Over the years, several important regulations related to the real estate sector were gathering dust on bureaucratic tables. One of the most important was the Real Estate Regulatory Bill that has finally been fast-tracked and will be implemented across the country.
Currently, real estate projects are primarily regulated by state governments as land and land improvement are in the State List of Seventh Schedule of the Constitution.
However, the scope of this Bill is limited to contracts between buyers and promoters, and transfer of property. Both these items fall within the Concurrent List.
What the bill aims to achieve:
- Consumer protection
- Standardization of business practices in the sector
Highlights of the bill:
- The bill establishes a state level regulatory authority called Real Estate Regulatory Authority (RERAs)
- All residential real estate projects, with some exceptions should be registered with RERA. Promoters cannot offer projects for sale without registering them with the regulatory authority
- Post registration the details of the project should be registered on the website of the regulatory authority(RERA)
- Of the total amount collected from buyers for a project, 70% must be maintained in a separate bank account and should be used specifically for construction of that project. This amount can be altered to less than 70% by the state government.
- State level tribunals will be established under the bill, called Real Estate Appellate Tribunals
- If a RERA observes that an issue impacts competition, it may refer the case to the Competition Commission
Key issues in the real state sector:
- Lengthy approval process for project clearances: Streamlining the approval process by establishing a single window clearance system for approvals
- Lack of clear land titles: Unclear land titles and lack of transparency in real estate transactions are detrimental to the development of the real estate sector. Modernization of land records, including land titles, would be useful for land based developmental and regulatory activities
- Prevalence of black money: Real estate sector is particularly vulnerable to black money through underreporting of transaction prices while paying taxes