Infra Talk: RERA should address concerns of developers

Real Estate Regulation & Development Act (RERA) is a defining moment in the Indian real estate sector. It will bring in a systematic approach and enhance transparency which will aid growth of the sector. To the buyers, it safeguards their interests: brings transparency, ensures accountability and timely completion projects. 

Unfortunately RERA does not address the concerns of the developers thereby not providing a level playing field for all the stakeholders. From an industry perspective, it will increase credibility in the long term leading to higher domestic and foreign investments. The law will ensure fiscal discipline, but increase the demand for credit. 

We believe lack of clarity on the various mechanisms pro-posed will only add to costs through delay, making projects not only more expensive, but ensuring that affordability continues to be a distant dream. For instance, it is not clear whether RERA applies to under-construction units as well. The central rules state that these would apply to under-construction units while state rules say otherwise. But, can existing projects comply with retrospective legislation? 

While the Bill certainly appears to be consumer friendly, in reality it could be counterproductive as a minority handful can obstruct a pro-development proposal. Similarly, it discourages Joint Ventures between developers and landlords by terming them as promoters. Many landlords would be skeptical of taking all the responsibilities of the project and hence will be discouraged to tie up with developers. 

Most importantly, the Bill does not bring the government authorities into the ambit who are responsible for the continuous changes in regulations, lack of transparency and predictability in functioning. The World Bank in its report on Ease of Obtaining Construction Permit Index ranked India 185 out of 187 countries. This means India is in the same category as war torn countries where institutions have collapsed.