In this Livemint article, Rohan Shridhar and Kshitij Batra, Associate and Junior Fellow, respectively, write about the Real Estate (Regulation and Development) Act (Rera) – a well intentioned legislation to safeguard interests of buyers in the housing market being counter-productive and hurting the beneficiaries due to restrictive state capacity. Excerpts bellow:
"At the crux of Rera are provisions aimed at increasing the accountability of developers, such as compulsory registration of projects (exceeding a size threshold), creation of an escrow account to hold project receivables, mandatory disclosures and heavy fines and penalties on compliance failure."
"...developers in many cases are unable to meet the timelines agreed to with the buyers not as a result of their malfeasance, but due to a failure of efficient government coordination.
"The costs of penalties, refunds and interest payments thus borne through hamstrung state capacity by developers will then ultimately be paid by consumers in the form of higher prices, without fundamentally increasing housing supply."
Read the entire article here.