SC cancels RERA registration of Amrapali Group; NBCC to take over projects

The Supreme Court on Tuesday cancelled RERA registration of the Amrapali Group and asked the National Buildings Construction Corporation (NBCC) to complete all the pending projects of the group. The court came down heavily on Noida, Greater Noida authorities and banks and said they had colluded with the group to the detriment of homebuyers.
The SC was delivering its verdict on the stalled projects of the embattled Amrapali Group. It gave respite to over 42,000 home buyers. The court also directed the Enforcement Directorate (ED) to investigate money laundering by officials and directors of the Amrapali Group.
Justice Arun Mishra-led bench said that the company management had diverted funds. It also appointed C R Venaktramani as court receiver and said all rights of Amrapali projects will vest in the person.
The court directed Chartered Accountant of India to conduct proceedings against Anil Mittal, one of the two auditors, and submit a report in six months. The lease deed with regard to the projects by authorities also stands cancelled and it has been handed to C R Venkatramani. He is to ensure that the title is passed and possession is given to buyers.
Buyers will pay balance sale consideration to Supreme Court, which will be kept in fixed deposit and shall be used by NBCC for completing the projects. Homebuyes will submit the dues in escrow account. The commission of NBCC is fixed at 8 per cent. The court asked the concerned ministries at central and state level to take action against promoters of all the projects throughout India and make sure they are completed in time and make report of violations done by all the promoters.

The court said that there is no need to secure loan againt the project as the buyers have already paid the full money. The money paid by the buyers included the duties to be paid to the authorities. However, the authorities did not ensure compliance with conditions of lease, they cannot have any charge over the project.
The apex court further said that the dues of banks and authority will be realised by selling the attached property other than the projects. It alsl said that Noida and greater Noida authorities will have to execute the tripartite agreement and issue completion certificate once the project is done. All persons who have benefitted from the siphoning off funds will have to deposit the money. The authorities will have to issue conveyance deed irrespective of the dues pending to them.
The court will convene on August 8th 2019.

Realty developers struggle to sell homes, but boom in office space segment

The two main segments of Indian real estate have shown mixed trends in the past five years. While realty developers have struggled to sell residential properties, those dealing with office spaces have relatively done well because of good absorption. Embassy and Blackstone are planning to come up with the listing of the country's first real estate investment trust (Reit).
A slew of measures such as demonetisation, goods and services tax, RERA (Real estate regulation and development Act) have hit the residential sales badly. National Capital Region has been hit the hardest as it was mostly investors' market. Sales have halved in Noida and Gurugram. Prices have also remained stagnant, leading to "time correction". While affordable segment is still selling, it is the premium segment that is facing lower sales.
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Note:
•Data points are updated till Oct-2018
•Apartment, vilas and independent floors have been considered.
•Lottery supply has not been included
•Average wieghtrd price of absorbed units being considered
•Rent is per sq ft per month; 2018 figures are estimates; Source: JLL

1 year of RERA: Builders still selling distant dreams without clear roadmap

Almost a year after the Real Estate Regulatory Act (RERA) was enacted, its implementation is still patchy, with a permanent regulator missing in most states. The result is that buyers still have not got a clear roadmap and builders continue to sell distant dreams.
Among 29 states in the country, only Maharashtra, Madhya Pradesh and Punjab have set up permanent real estate regulatory authorities so far. Jammu and Kashmir is out of the purview of the Act as the state has to enact its own law.
"Given that it is a state subject, the implementation has been quite varied," said Pallav Pandey, Co-Founder and CEO, FastFox, an online platform for rental housing, adding that "much confusion persists on what is permissible in practice".
According to a report by the consultancy firm Knight Frank, eight states have not even installed a regulating authority and the remaining 17 have installed "interim" regulators.
"Sadly, most states have been playing the waiting game about getting a permanent regulator after handing over the reins to such 'interim' authorities. What was strictly supposed to be a stop-gap arrangement has turned into a standard," says the report.
Additionally, only 14 states and seven Union Territories have a functional portal in place and 20 states and the Union Territories have notified the rules.
The report says that Maharashtra had been among the best executioners of the Act. Over 25,000 projects have been registered under RERA across India, out of which 62 per cent are in Maharashtra alone.
"Maharashtra is the only exception where the regulator's proactive functioning has set new precedents every second day," the report says.
Although setting up of a permanent regulator has sorely lagged behind, stakeholders say the RERA had already caused some perceptible changes in the market.
"The Act has helped in eliminating the pre-launch projects completely from the market which had led to a price hype," says Gautam Thapar, CEO of Delhi-NCR based Thapar Builders.
"In the past one year, the RERA Act has become a custodian of the much-required transparency and redefined rights for both of the sides. It has also helped the industry to clean up the unorganised and fly-by-night players from the market," he added.
According to Anshuman Magazine, Chairman of India and South East Asia, CBRE: "The reform has brought about regulation and transparency into the sector, further augmenting the growth of the property market in India."
Talking of limitations, Amit Wadhwani, Director of Sai Estate Consultants, said that RERA had not been able to curb black money in real estate yet. "Provisions regarding controlling the black money should be brought into effect, he emphasised.
He also said that builders were putting dates much ahead of their approximate completion time thus giving themselves much greater leeway in handing over projects. The regulator should take that into account and give projects a stipulated time to complete.
A major feature of the Act is that even brokers and consulting agents have to register themselves. However, this was not really happening.
"For brokers or agents, the year has been somewhat overwhelming. A number of them have refrained from registering to take advantage of the RERA opportunity," said Shubika Bilkha, Director of Real Estate Management Institute (REMI).
She said that women who served as agents have in particular been more wary to involve themselves in this evolving framework. "It is incumbent on the industry and the regulators to ensure that these agents find their way into the structured regime," Bilkha added.
Market players say a major obstacle in the way of boosting demand was the higher rate of Goods and Services Tax (GST) on under construction and near completion projects.
Thapar said there had not been enough impact on buying decisions for near-completion projects due to the higher GST rate of 12 per cent on them in comparison to 4.5 per cent service tax earlier.
Pandey from FastFox says the government should think of bringing the rental housing also under the purview of the Act. "RERA only covers new home sales. That is not the complete real estate," he said, adding that 40 per cent of urban India lived on rent.
Despite the initial hiccups, most stakeholders believe that, eventually, the law would help in leading to a stable, streamlined and transparent property market. "In the long run it will bring about a better aligned structure to the realty sector," Magazine of CBRE said.
Rituraj Baruah can be contacted at rituraj.b@ians.in
Views expressed are personal