The Cabinet recently approved the Real Estate Regulatory Act (which is now pending for final clearance at the Rajya Sabha). Moreover, Maharashtra is all set to receive its own very State-level housing regulator, with chief minister Devendra Fadnavis having cleared the decks for this much-awaited initiative.
The Maharashtra housing regulatory authority has the best of intentions at heart, and will enforce higher levels of transparency. It will fill a number of gaping loopholes at one go. One of the highlights of the policy is that it will make registration of real estate developers and contractors under a competent authority mandatory. Without such registration, developers and contractors will not be granted permission to conduct business at all.
Because registration was so far not been required by law, it was possible for literally anyone with some land and capital to become a real estate promoter. This is one of the primary reasons why there has been such a massive spate of illegal buildings of spurious construction in the peripheral areas of our cities.
Unfortunately, a majority of buyers – especially in the budget housing segment – maintained a kind of blind faith that anyone who has the capacity to raise a building has to be registered somewhere, and that his activities are therefore happening according to some basic industry norms. This has led to countless buyers in Maharashtra being cheated by unscrupulous people who do not honour even the most fundamental criteria of ethics.
The HRA will go a long way in protecting home buyers from delays in possession timelines, literally empowering them to take control of a project that has been stalled because of any reason. In fact, the regulator will literally separate the wheat from the chaff by presenting a firm legal rationale for buyers to opt only for registered, properly capitalized developers who have a convincing record of timely completions and standardized quality of construction.
In short, the HRA marks the beginning of the end for fly-by-night operators and the plague of malpractices that has been holding the real estate sector in Maharashtra to ransom for far too long. However, in its current draft, it does not appear to acknowledge the massive issues that real estate developers have been facing on their part.
Apart from protecting buyers from unscrupulous developers, it should also protect developers from unscrupulous government bureaucrats and agencies who have rendered the entire development process an expensive nightmare. If the state government intends to play the role of facilitator and enabler with this policy, it should work both ways and ensure that credible developers are not hampered.
Authored By: Arvind Jain, Managing Director – Pride Group