The Maharashtra Real Estate Regulatory Authority’s (MahaRERA) move of asking for quarterly progress reports from developers in the real-estate sector, nudging them to publish approved plan in public (on website) to improve transparency and inform consumers on where their projects stand is leading to a drop in disputes in the sector, said Ajoy Mehta, chairman, MahaRERA, while addressing the CII Annual Conclave on Indian Real Estate 2023 held in New Delhi, on May 29, 2023.
He said the idea is to increase transparency on multiple fronts. Maharashtra RERA is now asking developers to put the approved plan of their projects on their websites and designate an account for each project so that home-buyers know exactly how their money is being spent. “The information that you have as a developer, should be there as a buyer also,” he emphasised, making a case to cut down on information asymmetry in the real estate sector.
Maharashtra RERA is also red-flagging projects on delays and ensuring a neat division between accountants and auditors of real-estate players to avoid conflict of interest. “As a regulator, we track when a project was to be completed and if the project is getting delayed, then the developer needs to be told that they lagging behind,” said Mehta. When RERA came in seven years ago, almost 38 per cent of projects came in seeking (time) extensions and now, only 9.6 per cent seek (time) extension (to complete projects), he estimated.
“We are working on separating accountants and auditors. Developer’s accountant cannot be its auditor,” Mehta affirmed. Speaking about how MahaRERA is trying to reduce disputes in the sector, he said “Even though we are regulator, we have started conciliation forums. As a regulator, my deliverable is to ensure zero disputes (between consumers and developers). Pre-2017, a third of registered projects had disputes, now three per cent of projects have disputes. My target is to bring down the disputes further to one percent”.
In an earlier session of the CII conclave, Manoj Joshi, Secretary, Ministry of Housing and Urban Affairs, had pointed out that the real-estate sector needs to access finance from the banking system and not be so heavily dependent on money of home owners to build houses. In the real estate sector, developers, contractors, and vendors (who work for developers) do not access credits from banks. They work on money that they get as advance from the government clients or developers who get their money from the house owners, he said.
Stressing that there have been a lot of improvement in the real-estate sector in the last seven years with Real Estate Regulatory Authority (RERAs) coming into being, Joshi, pointed out that most state-level regulators till now have focused on the consumers getting their booked homes on time. “The next wave of improvements, have to come from RERAs, on whether what was being promised to the consumer by the developers on standards of construction and other quality parameters are being delivered. This again takes us to accessing finance from banking systems, which can make it possible for developers to expedite construction and deliver the consumers after they have made the houses—this would be the ideal scenario” he added.
Addressing a special session at the conclave, Rajan Bandelkar, President, NAREDCO, said, “The development of cities relies heavily on job opportunities and livelihoods, as people migrate in search of employment. RERA, along with the complaints and issues it addresses, may not be popular among some individuals. However, I see it as an opportunity to solve problems related to the real estate industry. Infrastructure development and government investments are essential for initiating projects and generating job opportunities. Without sufficient demand and sales, the completion of construction projects can lead to unfortunate situations like the ones we've seen in China, where partially completed buildings had to be demolished due to a lack of occupants or buyers.”