To deal with the problems of delayed projects, unscrupulous selling practices, and an overall lack of transparency in the real estate sector, the Government of India enacted the Real Estate (Regulation and Development) Act 2016 on March 26, 2016. The provisions of the Act came into effect from May 1, 2017.
Since then RERA has had a massive impact on the real estate sector. In several states, RERA has been successful in keeping track of the progress of real estate projects and bringing transparency, accountability, and efficiency to real estate transactions. From a real estate developer’s point of view, RERA certification is of great importance, not only because of the legal requirements but also because now most customers have developed faith in RERA. They prefer to invest in projects that are being monitored by RERA.
Sanjay Bhoosreddy, Chairman of Uttar Pradesh RERA, spoke to Anoop Verma, Editor (Desk), ETGovernment, on the measures that have been taken to bring transparency to Uttar Pradesh’s real estate sector. He provides an overview of UP RERA’s initiatives for protecting the interests of the customers and other stakeholders, while ensuring growth of the real estate sector.
Edited excerpts:
How is Uttar Pradesh RERA enabling the real estate sector in the state to function smoothly?
RERA has been established with the object of protecting the interest of the consumers and facilitating the development of a healthy real estate sector, which has discipline and potential for fast growth. The real estate sector will grow if the projects can be completed in time and the buyers can get timely delivery of the properties in which they have invested. RERA is there to ensure that the promoter has clear land title and all the required approvals and that he utilizes the funds for construction of the project, while meeting the timelines. We also ensure that the promoter submits periodical updates of the project so that the consumer knows the health of the project and the timeline for the delivery of his unit.
What kind of impact is RERA having on the real estate sector in the state? Is there growth after the coming of RERA?With RERA there, the consumers can have confidence in the real estate sector. The confidence of the consumers is good for the promoters as the sector goes on the upswing. As per the market surveys by different agencies, the sales and prices both have gone up by more than 50% and the real estate services are contributing about 14% to the State Gross Domestic Product (SGDP). About 8.8% of the SGDP is coming from the construction sector and real estate is growing at the annual rate of 6% which is likely to gain further momentum. In the pre-RERA period, real estate was slow, sick and sluggish. In the post RERA phase, real estate is disciplined, self-assured and fast forward looking. In terms of new projects, in terms of registration, in terms of monitoring, in terms of dispute resolution between home buyers and promoters, U.P. RERA has done a wonderful job. How is RERA using new digital technologies to bring transparency to the real estate sector and safeguard the interests of the consumers, investors and promoters?RERA is using digital technologies to ensure that the details of all real estate projects are always before RERA and the consumers. The information on activities such as project registration, project extension, project updates, agent registration and extensions, complaint filing and hearing and enforcement of orders are online and available to the relevant stakeholders. RERA is capturing many of the particulars of the projects and complaints in digital form and now proceeding to capture the quarterly progress of the projects as well as the statutory certificates in digital format. RERA is engaged in upgrading the software and other technologies to ensure that we are able to monitor the projects on a real time basis including the utilization of funds. These details will be in the public domain for the benefit of the consumers so that they can make right choices at every stage.
What steps is UP RERA taking to ensure that the genuine grievances of the investors and consumers are quickly and transparently resolved?
Records speak louder. UP RERA has decided about 45,500 complaints out of about 53,500 complaints filed with it. This implies that around 38% of the total complaints decided all over the country were through UP RERA. This is a major achievement. This has become possible through the hard work of UP RERA members and the use of appropriate strategy and technology. We collected about Rs. 800 crore by way of recovery certificates (RCs). We have a very good revenue department and collector system in Uttar Pradesh. They are very effective.
UP RERA has introduced the system of e-courts to speedily resolve complaints. How are the e-courts functioning?
Ours is a paperless office. We are using e-courts. Every Bench of UP RERA holds court every working day. We are using self-contained and self-explanatory complaint forms, the cases are being assigned through the system. In general, a complaint is decided within 4 to 5 hearings. The enforcement proceedings are also streamlined. The consumer is not required to physically visit the RERA office. He avails of justice sitting in the convenience of his home. Numerous NRIs use this virtual process. People in Canada, Singapore, the USA and other countries regularly participate in hearings through the online system. If they have queries, They can contact our helpdesk in Lucknow and NCR online or telephonically. The complainants can file an online application for enforcement of orders if the promoter does not comply with our orders within stipulated time. RERA has ensured compliance of about 75% of the orders against the enforcement applications filed before it.
Recently UP RERA has issued directions to all promoters to file their Quarterly Progress Report (QPR). What kind of response are you getting from the promoters?
Filing of the QPR of the project at the end of every quarter is one of the most important duties of the promoter. RERA monitors if the promoters are filing the QPRs in time and imposes certain disabilities on the promoters who are found wanting in filing of the QPRs which includes late fees and non-extension of the registration of the projects. RERA also imposes penalties against habitual offenders. We have re-emphasised the importance of timely updates. Initiatives are being taken to revise the template of QPR and digitizing the relevant forms and certificates. As of now, the QPRs of about 75% of the projects are being filed timely–we are trying to take this figure to 100%. All promoters must file their QPRs in time.
In the last 25 years, why has the NCR region faced so many disputes between promoters and homebuyers?
Two-thirds of the cases with UP RERA are in NCR and one-third are in the rest of the state. The reason for the disproportionately large number of disputes in NCR is that urbanization happened in the pre-RERA days. The RERA Act came into effect only in May 2017. A significant part of the legacy housing and other building projects in NCR, which are mired in disputes, are from the pre-RERA period. But these disputes will soon be resolved. We are working to resolve all these cases associated with the legacy projects. The urbanization activity in Uttar Pradesh is now shifting from NCR to non-NCR regions. New projects are coming up in Jhansi, Gorakhpur, Varanasi, Meerut, Prayagraj, Ayodhya, Kanpur, Agra, Mathura and several other cities in Uttar Pradesh. We are ensuring that all these new projects are completed in a timely manner and the interests of both the buyers and the developers are protected.
In December 2023, UP RERA made it mandatory for all promoters to publicly declare bank accounts in which they receive funds from investors and buyers for any project. Is this policy bringing transparency in the real estate sector of Uttar Pradesh?
UP RERA’s directions on operation and maintenance of project accounts, 2023, require the promoters to maintain 3 accounts of the project in a scheduled bank in the project district. These are the collection account in which all the money from the allottees will be collected, the separate account in which at least 70% of the money collected from the allottees will be credited by way of auto-sweep from the collection account on a day to day basis. Further all the money received as loan for the land and construction of the project will be deposited in this account and shall be utilized only for the purposes of meeting expenditure on the land and construction. The third is the transaction account in which no more than 30% of the amount collected from the allottees can be transferred through auto-sweep from the Collection Account for meeting the other expenditures of the promoter.
How does this provision of promoters having three bank accounts bring transparency to the real estate sector?
At UP RERA, we are of the view that it is crucial that the allottee knows the Collection Account of the project in which he has to make the payment. Therefore, this account is available for public viewing on the web portal of UP RERA. We have issued directions to the effect that the promoter must give the details of the Collection Account in the allotment letter, in the agreement for sale and in all the advertisements and promotions. It is one of the most important checks to prevent financial indiscipline and ensure transparency. The promoters have started complying with this system. Those who do not comply with these directions, shall be heavily penalized. The penalty in this case can be as much as 5% of the cost of the project.
In 2021, UP RERA released draft guidelines for the formation of residents welfare associations. How are these guidelines helping in bringing transparency in the working of these associations?
RERA Act provides that after the completion of the project, the common areas of the project will be transferred to the AOA (Association of Apartment Owners) through registered sale deeds. This Act stipulates the formation of AOAs as per the local laws. Since there used to be a lot of doubts, RERA had framed guidelines for the formation of the AOAs in the light of the judicial pronouncements of constitutional courts. These guidelines were issued by the Government. We have not carried out any impact assessment of these guidelines and nothing has come to our notice that these guidelines were not helpful in meeting their stated objective. These must have been helpful to all including the allottees, the promoters and the planning authorities.
The middle class and the poor sections of society face the problem of acquiring housing in urban areas because the cost is too high. What steps can be taken to encourage the development of affordable housing projects in the state?
The real estate sector is mostly driven by market forces but both the central and the state governments are always making positive interventions for promotion of affordable housing. For instance, there is the PMAY initiative. There is also provision of a section of houses in the real estate projects to be developed and sold to the lower income groups. A welfare state endeavours to ensure that people from all sections of society are able to fulfill the dream of having a house of their own. As a regulatory authority, RERA makes appropriate recommendations to the government in the area of affordable housing.
