Home Buyers’ Misery In UP: Akhilesh Diluted RERA, Adityanath Yet To Provide Tangible Relief

The Central government’s Real Estate (Regulation and Development) Act (RERA) offered hope and protection to home buyers from unscrupulous developers in the country. This was more so in the case of those buyers who find their hard-earned money blocked in unviable projects.

After the rules notified in 2016 had been enacted by the centre to make the home-buyer, a king, all the states were to mandatorily frame and notify rules and implement the Act by 1 May 2017.

Three provisions in the Central Act were of special interest to buyers: The Act makes no difference between ongoing and future projects besides having other pro-buyer provisions like a penalty for non-compliance; a clause fixing liability on developers in case of structural defects; and the payment schedule it prescribed.

To begin with, RERA 2016 included all projects for which completion certificate was not given on 1 May 2017, the date of commencement of the Act, and which were ongoing on that date. In the case of non-compliance, the central legislation stipulates imprisonment of up to three years or fine up to 10 per cent of the project’s estimated cost or both.

On payment schedule, the Union Act provides for 10 per cent of advance payment to be specified in the model sale agreement or an application fee to be charged from the buyer at the time of sale agreement. Builders are also liable to rectify free of charge any structural defect that arises within five years of handing over of possession to buyers.

How The Akhilesh Government Diluted The Act

The Samajwadi party government led by Akhilesh Yadav not only delayed notifying the rules but it also decided to tweak key provisions as the builders’ lobby was said to have forced the then chief minister’s hand. Readers may note at this point that land being a state subject, states have the right to pass their own laws. The centre can only provide the guidelines.

So, while the central rule mandated that all ongoing projects that have not been given completion certificates be registered under RERA, the Samajwadi Party government diluted this rule in favour of the builders’ lobby by excluding incomplete projects from the category of “ongoing projects”.

This was a flagrant violation of the provisions in the central legislation, but the state government did not stop there. Projects in which maintenance of common areas and facilities had been handed over to RWAs or services had been given to local authority for maintenance were also exempted along with those projects in which, after completion of development work, sale deed had been executed in 60 per cent dwellings.

By not fixing any penalty for violation of rules the state also diluted the penalty norm on the compounding of offence.

As the Yogi Adityanath government was also slow-footed on the implementation of the Act, Ghaziabad-based Federation of Association of Apartment Owners, the apex body of apartment owners’ associations, filed a Public Interest Litigation (PIL) in the Allahabad High Court.

The PIL alleged that the state was yet to form a Real Estate Regulatory Authority and the Real Estate Appellate Tribunal. The PIL argued that Sections 20(1) and 43(4) of RERA stipulated that the two bodies should be formed within one year of the notification of the central legislation.

The notification, it was argued, was issued on 1 May 2016, hence the authority and the tribunal ought to have been formed by 1 May 2017.

After the High Court had asked the state about the progress made on the implementation of RERA, the state government on 26 July launched an online site, up-rera.in, for developers to register their projects.

While the process to create a regulatory authority has been set in motion, and 100 bureaucrats and lawyers have thrown their hats into the ring for the post of chairman and members, rules were yet to be framed and notified.

Concerned at the dilution of key provisions, a delegation of home buyers from the worst affected areas of the state, like Noida and Greater Noida, where thousands of buyers have been waiting for their flats for years and facing cost escalation, met Chief Minister Adityanath who assured them that there would be no dilution of rules. A special grievance cell was also proposed to be set up to help the buyers.

Until the undiluted rules are notified, the buyers have to make do with promises and a portal that doesn’t offer much.