WBHIRA: Deviation from key provisions of RERA may dilute ground-level effectiveness of Act

Certain key provisions which have been modified in the West Bengal Housing Industry Regulation Act, 2017 (WBHIRA) may impact the ground-level effectiveness of the The Real Estate (Regulation and Development) Act, 2016, (RERaD), according to ICRA.

The West Bengal assembly had passed its version of The Real Estate (Regulation and Development) Act, 2016, (RERaD) known as the West Bengal Housing Industry Regulation Act, 2017 (WBHIRA), on August 16, 2017. Although the same was expected to be notified within 60 days, notification happened over nine months later, on June 01, 2018.

“While the objective of the both the Acts remains largely the same, i.e. - to protect the interest of consumers and investors by introducing a regulatory regime to regulate and improve the level of transparency and accountability in the real estate sector, certain key provisions which have been modified in the WBHIRA may impact the ground-level effectiveness of the Act,” said  Shubham Jain, vice president and sector head, ICRA Ltd.

Moreover, timely appointment of the real estate regulatory authority, creation of the regulatory framework, establishment of an online portal providing details of projects and builders, and setting up of the appellate tribunals would remain critical for implementation of the provisions of the Act, it said.

It should be noted that the Centre has decided to send a team to urge the West Bengal government, to switch over to the Real Estate (Regulation and Development) Act (RERA) to protect homebuyers’ interest.

Experts have cited two major dilutions in key provisions of the RERA in HIRA, which was notified on June 1. “The first is ‘force majeure’ or unforeseen circumstances that prevent a builder from fulfilling his obligations. The RERA has clearly stated the circumstances: war, flood, drought, fire, cyclone, earthquake or any other natural calamity. HIRA makes a significant addition to the clause ‘or any other circumstances as may be prescribed’.”

The second deviation is on garages. The RERA clearly states that it needs to have a roof and walls on three sides for parking but does not include unenclosed or uncovered parking space. However, HIRA has removed the clause altogether and defined garage as any parking space sanctioned by the government authority.

ICRA also noted that despite the deviations highlighted above, the provisions of the WBHIRA continue to hold significant importance for buyers and investors, particularly with regards to elimination of fraudulent developers and agents, facilitation of informed decisions by the buyers, increased standardisation and appropriate use of customer funds.

“Fast-tracking of the required regulatory set-up would enable the flow of these benefits to the real estate sector in West Bengal,” said Jain.