Housing ministry asks state RERAs to set recovery mechanism for homebuyers’ refunds

MUMBAI: The Ministry of Housing & Urban Affairs (MoHUA) has sent an advisory to states, union territories and all state-specific real estate regulatory authorities (RERA) to formulate a recovery mechanism and appoint a recovery officer under their respective recovery laws on the lines of the mechanism adapted by the Gujarat Real Estate Regulatory Authority.

This is aimed at ensuring recovery of dues from defaulting realty developers. Homebuyers have been raising concerns regarding non-compliance or delay in enforcement of recovery orders issued by the authorities against defaulting developers.

The ministry had earlier asked six RERA authorities including Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh, Haryana, and Karnataka to suggest ways to ensure effective and timely execution of these orders as envisioned under the Real Estate (Regulation & Development) Act, 2016.
Following this, the ministry had received comments of Tamil Nadu, Gujarat, and Maharashtra real estate regulatory authorities. The ministry informed in the recently held second meeting of a sub-committee formed under the Central Advisory Council (CAC) that it has asked state authorities to follow the Gujarat model.

“It is a major concern that homebuyers across India are facing challenges in getting their refund orders enforced. We gave our report after studying the Gujarat model of recovery to the ministry for its consideration. It’s a very positive step that the ministry has written to all states suggesting the Gujarat model as a way forward for effective recovery,” said Abhay Upadhya, President of pan-India homebuyers body Forum for People’s Collective Efforts (FPCE).

According to him, FPCE is hopeful that state-specific RERA authorities will adopt the suggested model and ensure that homebuyers get refunds within a reasonable timeframe. This will go a long way in restoring the confidence of homebuyers on both effectiveness of RERA and on the real estate sector.In the meeting, FPCE’s General Secretary MS Shankar had highlighted that RERA authorities are more inclined towards promoting the growth of the realty sector as envisaged in section 32 of RERA. He was of the view that under this section regulatory authorities do not have any functional responsibilities and can only make recommendations to the state government.Shankar further highlighted that regulatory authorities need to focus on protecting the interest of homebuyers and regulating the sector by ensuring that all prevailing malpractices in the sector are removed. He also stressed on the issue of non-availability of data on the websites of realty authorities such as list of completed projects and projects that have received completion certificates, etc.

Manoj Joshi, secretary, MoHUA and Chairman of CAC sub-committee also acknowledged the lack of data as a major lacuna as none of the authorities are maintaining the data properly, showed the minutes of the second meeting of CAC sub-committee.

The homebuyers’ body had highlighted that as per their study of Karnataka Real Estate Authority, revenue recovery certificates for 1,212 cases have been issued out of 4,00 cases which amounts to only 25%. However, no information is available on recovery of these orders.

According to the minutes, UP RERA has made a recovery of over RS 800 crore through 400 recovery certificates from the promoters whose projects were launched in 2012, 2013, and 2014.

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