Pending Work Dampens Sentiment In Real Estate Sector
Despite granting of infrastructure status to affordable housing, a whole host of challenges continue to mar the real estate sector, particularly the residential markets
Photo Credit : Reuters
Despite granting of infrastructure status to affordable housing, a whole host of challenges continue to mar the real estate sector, particularly the residential markets. The negative effects of demonetization are beginning to show on the adverse sale of housing units in November and December 2016. Only four State government have notified the final rules to the Real Estate Regulatory Act (RERA), 2016 even as only two months are left for the implementation. In the meanwhile, interventions by the National Consumer Disputes Redressal Commission (NCDRC) has proved to be blessing for aggrieved home buyers even as the much talked about Real Estate Regulatory Authority comes to life.
NCDRC to the Rescue
Before the real estate regulator takes charge of dispute redressal, National Consumer Disputes Redressal Commission (NCDRC) is proving to be the protector of the rights of home buyers. There have been a spate of favourable decisions by the NCDRC in recent months. Delays faced by home buyers on account of obtaining possession of their homes or the issue of getting interest on their money deposited with the builders as advance etc. are some of the cases on which NCDRC has batted for the home buyers. Recently, NCDRC in an order stopped a builder from selling an already booked flat to a third party without issuing any prior notice of cancellation of allotment to the original buyer. In some other recent orders, the NCDRC has told builders that they have to hand over the possession of houses within a fixed duration of time.
A few weeks ago, NCDRC had ordered a Gujarat-based real estate firm to pay Rs 50,000 each to 23 homebuyers as it failed to execute sale deeds even after handing over the possession of the flats 20 years ago. NCDRC has also ordered that consumers seeking compensation worth Rs 1 crore and more or a group of consumers with similar grievances against a builder can now approach the national commission directly.
In recent times, the NCDRC has asked developers like Parsvnath, Jaypee Group, Unitech, Emmar, Lodha among several builders to refund the entire booked amount to the buyers (with certain percentage of interest) due to delays in giving possession. It has also imposed penalty on certain developers. "This has sent stern message to those developers who tend to delay construction and in-turn possession of residential units on one account or the other. Legal battles over delays in handing over projects to the rightful buyers never augurs well for the entire industry. There is always a dominos effect as the confidence of new home buyers takes a hit on future projects in that region/area," said a senior analyst who tracks real estate for a large consultancy.
Going forward, the Real Estate Regulation Act, 2016 will re-establish buyers’ faith in the institution of law and help developers to function better in a more organised setup. "A push to affordable housing, going forward, is expected to weed out some of the challenges faced by home buyers in past 5-6 years," said a Gurgaon-based developer.
The negative effects of demonetisation exercise (November 8, 2016 onwards) on the sales of residential property across top nine cities of India is now official. Between October and December 2016, there was a decline of 20 per cent or a drop in the sales of 54,721 units during October to December quarter compared with just 4 per cent dip in the July-September 2016 quarter says the latest report by online real estate advisor PropTiger. Gurgaon, Noida and Ahmedabad showed a 30% to 40% decline in sales in Q3 FY’17 on the Q-o-Q basis while Mumbai, Hyderabad, Bengaluru and Chennai witnessed around 20% fall in sales during the same period. Kolkata and Pune recorded the lowest level of decline at 8% and 12%, respectively, the report mentioned. Total residential launches in Q3 FY’17 decreased by 8% on the quarterly basis to reach 43,253 units in Q3 FY’17 compared with 47,032 units in Q2 FY’17, indicating a reduction in the activity levels across all the primary residential markets.
Implement RERA: Centre to States
With only four states and six union territories notifying the rules to the new Real Estate Regulatory Act, 2016, the Housing and Urban Poverty Alleviation ministry has send out stern warning to rest of the State governments. The four states to have notified the final rules to RERA are Uttar Pradesh, Gujarat, Madhya Pradesh, and Maharashtra. The central ministry has warned that States that a serious vacuum like situation may arise if the necessary institutional mechanisms under RERA were not put in place before the deadline of May 1 this year.
All the states are required to notify real estate rules including the general rules and the agreement for sale rules and establish the real estate regulatory authorities and the appellate tribunals’ maximum by April 30, 2017 as the Act would commence its full operation from May 1.
Stated including Haryana, Himachal Pradesh, Jharkhand, Andhra Pradesh, Chattisgarh, Karnataka, Kerala, Mizoram, Arunachal Pradesh, Rajasthan, Tamil Nadu and Puducherry said they would notify the real estate rules in February while Punjab and Uttarakhand will notify the rules after the new governments take office.
The Real Estate (Regulation & Development) Act, 2016 was notified by the ministry of HUPA on May 1 last year, which mandated states to notify their respective rules by October 31st last year.