The welcome change brought about by the Real Estate Regulation Act 2016 by introducing transparency and accountability to help the end user of real estate needs to be taken further by introducing single-window clearance for developers
The introduction of the Real Estate Regulation Act, 2016 was a landmark initiative taken by the government to regulate the real estate sector in India by addressing the core issues pertaining to the grievances of the homebuyers and thus protecting their interests. The recent World Bank’s Ease of Doing Business Report has shown an impressive change in India’s position as a global economic player but despite the implementation of RERA, India has just stepped up only one spot in the global real estate transparency index from 36 in 2016 to 35 in 2018. Though, the act has brought positive impact in gaining confidence of the homebuyers by safeguarding their interest, it still has to widen its scope to address the issues faced by the developers.
K.G. Singhania, partner, Singhania & Co.
One of the main concerns of the developers are the lacklustre attitude of the government agencies in providing timely approval to the developers for starting the projects. There are more than 50 approvals which are required to start a real estate project from about 20 or more government authorities and planning departments, such as approvals for ownership certificate, land use conversion, environmental and pollution no-objection certificates, non-encumbrance, road access and other related infrastructure related approvals.
The inception of RERA was done with the intention of putting a leash on errant developers from deceiving and cheating the buyers and one such provision which has proved to be a boon is Section 18. As per section 18 of the act, any promoter who does not provide with a timely possession of the title of the property to the buyer, such a promoter will be liable to pay the whole amount of the property paid by the buyer with interest at such rate as prescribed and in cases where the buyer does not withdraw from the project even after the delay in getting the possession of the property, the promoter is liable to pay him interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed. The promoter shall also compensate the buyers for the loss caused to him due to defective title or as the case may be. However, not every delay caused on part of the developer is done with a mala fide intention as it can also be attributed to external factors. Most of the grievances of the developers today, pertains to delay in getting timely sanctions for their projects from governmental authorities.
The severe bureaucratic delays faced by the developers to obtain these approvals sometimes even exceed a period of three years resulting into heavy financial loss to the promoters and investors of the project. After, the commencement of RERA, a delay in providing timely possession of the property to the buyer amounts to imposition of penalty on the developer, whereas the Act provided no mechanism that would make the government authorities accountable for not providing timely approval to the developers, which in most cases leads the developer in defaulting timelines for providing timely possession to the buyers.
The real estate sector is an important area attracting a good amount of FDI inflow in the country and a single window clearance for obtaining all essential approvals and clearances for realty projects under one single umbrella would be a very significant step. This can be in a form of a digitalized portal under RERA where all the documentation and clearances needed for starting a project can be scrutinized by government authorities within a specified time frame stipulated under the act. This will drastically reduce the time taken by the government authorities in sanctioning the projects and will also ensure a great amount of transparency. Also, there needs to be a provision under the Act which shall provide for a time bound approval process, binding the government agencies to grant the approvals within the time limit.
An example of one such system, for developing efficiency in the government officials in providing public services to the citizens in a time bound manner is that of the Maharashtra Right to Public Service Act, 2015. The Maharashtra Right to Public Services Act, 2015 brings in its ambit 462 services from 25 departments of the state for keeping a check on the errant government officials for not carrying out their duties. As per the Act, every Public Authority shall be duty bound to update the status of all applications regarding public services online, where such system is in operation within a stipulated period of time failing to which the officials would have to face penalties and disciplinary actions. The government of Maharashtra has also provided easy access to these services under the act through online applications via the Aapla Sarkar portal to the citizens.
The Regulatory Authority under the RERA should be empowered with similar powers as that of the Maharashtra State Commission for Right to Services wherein it can frame rules for procedures to be followed by governmental agencies to give approvals and clearances within a stipulated time. The authority may also be empowered to held the officials accountable in case of any default on their part in providing their services.
A Single Window Clearance is a long desired system which is being awaited by the developers and the promoters of the realty projects. The implementation of a single window system for clearance will provide a major boost to the realty sector, thus saving a lot of time and cost of the developers as well as encouraging more investments in the sector. The real estate sector being one of the major contributors in the country in providing employment as well as consumption demand offered to various core sectors including steel and cement industries, and thus it is imperative on part of the government to create an easy, approachable and transparent market for inviting investments in the sector.