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Delayed projects in some states may not benefit from Rs 25,000-crore realty fund

States and Union Territories such as Arunachal Pradesh, Lakshadweep, Meghalaya, Nagaland and Sikkim do not yet have an Authority.

Representative image
Representative image

While the real estate fund worth Rs 25,000 crore announced by the government on November 6 seeks to provide relief to homebuyers and real estate developers, it may not benefit homebuyers of delayed or stuck projects in states and Union Territories without established regulatory authorities or their own Acts.

Also buyers, in states that have kept ongoing projects out of RERA's ambit, may not benefit.

In a letter to Prime Minister Narendra Modi, The Forum for People's Collective Efforts (FPCE) has said that "some states have decided to either illegally remove 'ongoing projects' from RERA or go slow in implementing RERA. This is  beyond the control of homebuyers. Homebuyers of delayed projects in these states cannot be punished for no fault on their part."

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The announcement on November 6 makes it clear that the stress funding may not be available to projects that have not been registered under RERA. As per the Ministry of Housing and Urban Affairs website, 29 states and union territories have so far set up a regulatory authority. States and Union Territories such as Arunachal Pradesh, Lakshadweep, Meghalaya, Nagaland and Sikkim do not yet have an Authority.

West Bengal has enacted its own Act West Bengal Housing Industry Regulation Act, 2017. As per an Anarock estimate, there are around 13,000 delayed units in Kolkata alone (launched before or during 2013) worth Rs 7300 crore.

Homebuyers in their letter to the PM have said that West Bengal "has chosen not to implement RERA, but has enacted its own law - West Bengal Housing Industry Regulation Act, 2017 (WBHIRA). This is in gross violation of the Constitution and in complete disregard of a Parliamentary law. However, we have challenged the constitutional validity of WBHIRA before the Hon’ble Supreme Court.

There are some states like Telangana, Haryana, Uttar Pradesh, Andhra Pradesh, Karnataka, Tamil Nadu, Punjab, Maharashtra, Madhya Pradesh, Chhattisgarh which through their rules under the Real Estate Act (RERA) have illegally kept either all ongoing projects or some out if out from the ambit of RERA. There are other like Himachal Pradesh and Kerala where regulatory authorities have just been constituted and hence significant number of projects are yet to be registered.

"The act of West Bengal to enact WBHIRA and ignore RERA; or that of some States to either illegally remove ‘ongoing projects’ from RERA or go slow in implementing RERA, has been beyond the control of homebuyers. Inspite of our repeated appeals to the State Governments, there is no respite for homebuyers from these delays / illegalities," the letter said.

 

Homebuyers have demanded that a task force be formed under the housing ministry consisting representatives of homebuyers, Mo/HUA officials, state governments officials, financial institutions, independent persons of repute, industry experts (other than builders) to identify projects nearing completion which should be taken first for completion, to monitor end use of funds disbursed and progress of construction in such projects, the letter says.

Homebuyers said that the task force should identify a Public-Sector Enterprise who may be assigned the job to complete such identified projects under its supervision. The task force should prepare timelines for completion of all such delayed projects and should also assign due priority according to the status of completion of each project.

"Depending upon the magnitude, multiple task force may be constituted representing each zone. Also committee of homebuyers of respective projects should be formed to keep close watch on progress of project and to receive feedback of any wrong doing. No builder should be a part of such task force since the entire exercise will be primarily against their misdeeds and hence they may use their influence to derail the whole process to ensure favor for their own projects," the letter said.

Homebuyers also requested that no funds should be disbursed directly to builders.

Some states have excluded ongoing projects from RERA registration

Telangana and some other states may also face a challenge. Telangana rules clearly state allowed not to register projects prior to January 1, 2017.

“Ongoing projects means a project where development is going on and for which occupation certificate or completion certificate has not been issued but excludes such projects for which building permits were approved prior to 1.1.2017.”

There may be 23 such projects in the state that have been on an average delayed for more than seven years, says B T Srinivasan, vice president, FPCE and in-charge for Telangana and Andhra.

According to  Harsh Vardhan Patodia of Credai Bengal, the body is examining the ‘technical issue’ with regard to RERA registration in West Bengal.

"If the law says that the project has to be registered with RERA, I think there will be a technical problem for us to access that fund. We have to find a legal way to resolve this. Mandate may not permit them (the government) to give funds to projects that are not registered with RERA. As a developer if the state government does not enact a law, it is not our fault. We may have to take a decision," he told Moneycontrol.

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First Published on Nov 8, 2019 02:58 pm
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