Real estate regulators hampered by compliance issues, lack of transparency

Experts said state governments should bring out compliance laws to enforce the execution of the authority’s orders.

India’s state real estate regulators continue to face problems such as lack of transparency and cooperation by developers and compliance issues even about seven years after the law establishing them came into effect.

Most problems pertain to projects developed before the Real Estate (Regulation and Development) Act of 2016 came into place, Anita Karwal, chairperson of the Gujarat Real Estate Regulatory Authority, said at the National Real Estate Development Council’s 16th convention in New Delhi on February 2.

"In such cases, a lack of cooperation from the developers makes it difficult for the authority to resolve issues," Karwal said.

She said that of 900 cases in one instance, about 880 developers had no clue about the proceedings as several companies had hired mediators to handle the cases.

"One other aspect to look at is redevelopment projects that currently do not come under the ambit of RERA, which may be a concern," she said.

Major redevelopment projects are underway in cities including Mumbai. The Dharavi slum rehabilitation project in the city, involving 1 million people, is not under the ambit of RERA because it does not involve the sale of houses.

Additionally, the panel discussed the failure of developers to comply with the transfer of land titles. In Karnataka, Moneycontrol reported several cases of the authority having to order developers to transfer common areas of projects to homebuyers, most recently in a Larsen & Toubro project in Bengaluru.

Experts said state governments should bring out compliance laws to enforce the execution of the authority’s orders. In one of the first such cases, the housing and urban development department notified the Odisha Apartment (Ownership and Management) Act, 2023, in November. This law defines the ownership of an apartment in a building and the use of its common areas and facilities.

Retired bureaucrat Pradeep Kumar Biswal, a member of the Odisha Real Estate Regulatory Authority, said one of the biggest challenges was the timely execution of orders.

“Being a quasi-judicial body, RERA is not empowered with powers of a civil court. Thus, when money has to be recovered from a developer for a delayed project, it is up to the magistrate and the government departments. Often, it is delayed for years," he said.

Additionally, lack of coordination between the state planning authorities and RERA also leads to a lacuna.

"We need a common and speedy interface between the local authorities and RERA to track the developments and dispose of cases faster,” he said.

Kaushal Kishore, minister of state of housing and urban affairs, urged the construction and real estate sector not to underquote prices while bidding for residential and affordable housing project contracts from the government. The minister said this practice leads to problems such as incomplete projects and escalating costs.

"Builders tend to quote around 15 percent less than the actual amount during the tender process. As completion nears, prices increase, leading to subcontracting issues that affect both builders and beneficiaries," he added.

Housing and Urban Affairs Secretary Manoj Joshi pointed out that the central government is encouraging all states to increase property tax, as recommended by the 15th Finance Commission.

“This move aims to incentivise state governments for housing and affordable housing projects. Progress in this direction is eagerly awaited, as the 16th Finance Commission will consider this factor when making necessary allocations in the future," he said.

President of NAREDCO, G Hari Babu, apprised the government of the initiatives to build affordable houses. Taking cognizance of the discussions at the convention, the chairman of NAREDCO, Dr Niranjan Hiranandani, assured the government that in its urban planning, the organization would fully support the government with all its expertise and experience.