A delay in the formation of a regulatory authority has affected the launch of real estate projects in Bengal. Developers have lost out on new business opportunities while aggrieved home buyers were left in the lurch because of the delay.
Six months have passed since May 4 when the Supreme Court had struck down a Bengal specific act to govern real estate activities in the state as ‘unconstitutional’, prompting the Mamata Banerjee-government to come up with new rules following the central model act.
The housing department had notified rules on July 26, which laid down the legal framework for setting up the Real Estate Regulatory Authority. However, it is yet to become functional for the want of a chairman and members.
More than 100 projects are yet to see the light of the day for want of registration by RERA, which is a must before builders can solicit buyers for new projects. Likewise, several hundred complaints filed by harassed homebuyers are also awaiting adjudication of the authority.
The vacuum in the regulatory authority comes at a time the Mamata Banerjee government announced a relief in the rate of stamp duty and the circle rate to stimulate demand in the real estate sector and encourage buyers.
In the absence of the authority, neither are the developers able to launch projects and take advantage of the buoyancy in the market nor are buyers getting enough projects to choose from.
“It is a fact that project launches are getting delayed as the authority has not been formed. We hope it is done soon,” Nandu Belani, president of Credai, Bengal, said.
The formation of the regulatory authority involves a well laid-down search process. The chairperson and other members of the authority are to be appointed by the state government on the recommendations of a selection committee consisting of the chief justice of the high court or his nominee, the housing secretary and the law secretary or their nominees.
Sources said the selection committee has been formed even though a change of secretary in the housing department may have slowed down the process, apart from the puja holidays.
The selection committee would be required to recommend candidates which the government is bound to pick from to fill up the post of chairperson.
Some of the developers, however, are not willing to wait for the formation of the authority and registration before launch to avoid cost overrun. Sushil Mohta, president of Credai West Bengal and owner of Merlin Group, said he has advised members to go ahead without registration, if required.
“Our project is fully compliant with the rules framed under the West Bengal Real Estate (Regulation & Development) Rules, 2021. Once the authority is formed, we will take registration,” Mohta said when asked about a new Merlin project.
Not all developers are confident though. One of them pointed out there is no legal provision to register ongoing projects in the rule promulgated in July. “Some of us may not want to expose our projects to legal challenges and put buyers into jeopardy,” said a city-based developer who did not wish to be named.