Maharashtra to get country’s first Housing Regulation Act

Apna Ghar is a dream nurtured by almost every individual. However, despite investing a lion’s share of one’s lifetime savings, denizens are not able to cherish this dream due to unending delays, lack of clearances, and the list goes on.

Imagine a scenario where details pertaining to the property title, layout or completion plan is disclosed infront of you like an open book? Or how about accessing project details online? Or imagine if the defects in the project are rectified by the builder without any extra charge? Sounds interesting? Well, if you happen to be a resident of Maharashtra, this soon will be a reality for you.

Finally, the Maharashtra government has taken that bold step by paving the way for the implementation of the Maharashtra Housing Regulation and Development Act, 2012. Being the country’s first such regulator, this could be a game-changer for the entire state’s realty market. Realising its potential (or probably ignoring the pitfalls), the act finally received Presidential assent on 24 February, 2014.

The Maharashtra Act No II of 2014 aims to regulate and promote the construction, sale, management and transfer of flats, on ownership basis and establish a Housing Regulatory Authority and a Housing Appellate Tribunal. The act has been welcomed by the real estate fraternity as well as consumers.

So, will the Maharashtra Housing Act really help the sector in the state? Or is there any catch that people seem to have miss? Let CommonFloor unfold the provisions of the Act.

There are innumerable cases where due to the clandestine practices resorted to by developers, the end-users had to bear the brunt. Therefore, to begin with, let’s analyse few clauses that will benefit the end-users.

Benefits to the end-users

* Hiding several important details from the buyer is a common occurring these days. Carpet area and layout plan being the most common one. But no more! Clause 3 clearly states that full and true disclosures are to be made by the promoters before selling any property. These include details pertaining to the title of the property, all encumbrances, size of plots, layout plan, carpet area, schedule of completion of each phase of the projects, nature of fixtures with regard to flooring and sanitary fittings, to name a few.

* Be it the recent case of Supertech in Noida or Campa-Cola society in Worli, in both the cases there were orders by the city authorities to demolish the building. While the question as to why the alarm was not raised on time remains unanswered, to prevent developers from tricking naive buyers, Clause 4 has made registering the project and displaying it on the website of Housing Regulatory Authority mandatory. Thus, no developer can sell the project without registering it with the authority. Interestingly, a project can only be registered if it has all requisites approvals.

* Project delay has plagued the realty sector heavily. In addition to tedious approval process, there is another major reason. These days, developers tend to take money for a particular project and put that money in buying land parcels for another project. In order to prevent this, Clause 12 states that developer has to maintain a separate account of sums taken as advance or deposits and to be disburse them for purposes for which given.

* In order to lure prospective buyers, developers use several gimmicks. The most common being glossy brochures and the sample house. They try to make the sample unit look as fancy as possible. The problem occurs when the material showed in the sample house turns out to be way different from the one used for actual construction. But no more! As per Clause 15, defects noticed within five years should be rectified by the developer without any extra charges.

* Last but certainly not the least, delay in possession in the major bone of contention between a developer and a buyer. As per Clause 16 (b), if a developer fails to deliver a project on the date specified for reasons beyond his control, then a home buyer shall be entitled to receive the amount paid by him with interest of 15 per cent.

These are few positives that are likely to boost the realty sector significantly once the Act comes into effect.

Drawbacks of the Act

However, as every coin has two sides, there are few clauses that are shrouded in ambiguity. For instance, in case of project delay, if a developer fails, he is expected to return the money with 15 per cent interest, however, if a buyer is at default, the penalty is equal to the amount defaulted.

Further, as per the existing law, a developer is allowed to collect 10 per cent from the buyers as booking amount. However, as per the new act, developer is liable to collect 20 per cent and that too without any written agreements.

That’s not all! As per Clause 19 (2), if FSI increases due to change in the law or government policies, developers can use the increased FSI for constructing further without obtaining any consent from the home buyers.

These clauses force us to ponder upon if the act is to subserve the interests of the developer community or is it for the end-users!

All said and done, the Act will surely bring in much-needed transparency in the sector as there will a body to attend the grievances and redressals. But certain amendments are required. Also, none of the clauses talk about pricing of the projects. Further, the act has completely ignored the projects built by Maharashtra Housing and Development Authority (MHADA) and City and Industrial Development Corporation of Maharashtra (CIDCO), which forms a significant part of the state’s market.

Will the Maharashtra Housing Regulation and Development Act actually benefit the Maharashtra’s realty market? Or will it just be an addition to the long-list of already existing regulations? Well, for this, we have to wait and watch!