1. 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
2. Act analysis- Real estate (Regulating and Development) Act 20162
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 missedthe 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=0ahUKEwjgpKOu
jbzQAhWEtI8KHYyfCcYQFgghMAE&url=http%3A%2F%2Fwww.indiacode.nic.in%2Facts -in-
pdf%2F2016%2F201616.pdf&usg=AFQjCNEfl-30dPEDNLTh2rQZcJeCUTO8wg
3. 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,andparticipation. 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.
4. 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 government
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
5. 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
4 Entry 6 of the concurrent listtalks transfer of property other than agricultureland;registration of deeds and
document. And entry 7 of the concurrent listtalks aboutcontracts includingpartnership,agency,contracts of
carriage,and other special formof contracts,but not includingcontractrelatingto agricultureland.
5 The constitution of India,article254,(P.M Bakshi,page number 251)
6. to hear appeals from the decisions, directions or orders of the Real Estate 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 lawand justice(The Real Estate (Regulating and Development) act 2016)
7 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
8 Government of India,ministry of lawand 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
•
7. 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.
9 Bengaluru Mahanagar PalikeBuildingbyelaws 2003 (government of Karnataka)
8. Graphic 3: Group of Actors
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
10 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
Group of
Actors/stakeh
olders
Authority
Consumer
Developer
Agent
Appellate
tribunal
Parastatal
bodies
9. 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].
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
11 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
12 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016 (Page
number, 7)
10. 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.
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
13 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
14 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
15 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
11. 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
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.
16 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
Real EstateRegulating
Authority and
Appellate Tribunal
Registration of all
residential real estate
projects
Registration of real
estate agents
Duties of consumer
and developer
Panalties
12. 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 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
17 http://chdconsumercourt.gov.in/consumerProtectionAct1986.pdf
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 Agent
if 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/consumer
if 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 upto
five percent of the plot,
apartment or building
cost..........
13. 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].
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;
18 Government of India,ministry of lawand justice(The Real Estate (Regulating and Development) act 2016)
14. 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].
19https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwiUtK7
KjrzQAhXBr48KHQDMCi8QFggbMAA&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
15. 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
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
22https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwj17Iqq
j7zQAhVHpY8KHfBaC6EQFggdMAA&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 Prevelenceof
black money
16. 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.
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].
23 http://www.hindustantimes.com/real-estate/does-rera-have-an-overriding-effect-on-state-laws/story-
gflTANpWZd6hpa1cWIQj8K.html
17. “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 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
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(Regulationof Promotionof Construction and Transfer byPromoters)Act, 1993.
26 Maharashtra HousingRegulationandDevelopment Act, 2012,
https://www.maharashtra.gov.in/Site/Upload/Acts%20Rules/English/Housing_Act29314.pdf, Draft Haryana Real Estate
(RegulationandDevelopment)Bill, 2013, http://tcpharyana.gov.in/Tentative%20Draft%20Bill%2014.02.2013.pdf.
18. 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
6) Separate Real estate
appellate tribunal
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 legislationwillbe 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.
