Protecting homebuyers

THE Supreme Court’s interventions to offer a protective shield to homebuyers have resulted in definitive progress, and a step forward in the quest for fair play, transparency and accountability as is evident from its upholding of a Rajasthan High Court order. The interest of homebuyers has been put above that of banks when a real estate company defaults on repaying loans and handing over possession. An amendment to the Insolvency and Bankruptcy Code made homebuyers part of the committee of creditors deciding the fate of the company, but they were not given precedence in payment of dues in case of liquidation. Making banks accountable, a complaint can be made to the Real Estate Regulatory Authority (RERA) if a bank has taken possession of an incomplete project, and in the event of a recovery process conflict, RERA will be effective.

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The ground reality does not seem to match the claims of having a robust regulatory mechanism in place and all-round adherence to the Centre’s draft ‘agreement for sale’. Hence, the court directions to scrutinise whether the rules adopted by the states under the legislation comply with those framed by the Union government in 2016. Last month, the top court had expressed its keenness on a national-level model to deter builders from fleecing homebuyers instead of state governments having separate builder-buyer and agent-buyer agreements. Uniformity in the basic terms and conditions to avoid exploitation of flat buyers is also what a PIL seeks.

Over 77 per cent of the total assets of an average Indian household are held in real estate. Data also shows it to be the single largest investment of an individual in his lifetime. Introduced with the objective of ensuring greater accountability towards consumers, RERA was also mandated to reduce frauds and delays, and formulate a fast-track dispute resolution mechanism. As the regulatory authority finds its feet, a minimum set of guidelines for the protection of consumers would be of immense help.