According to the Maharashtra Real Estate Regulatory Authority, more than 500 projects registered in January 2023 have not uploaded quarterly progress reports

In a first, the Maharashtra Real Estate Regulatory Authority (MahaRERA) may temporarily suspend registrations of more than 500 real estate development projects registered in the state in January 2023, that have not uploaded the quarterly progress reports (QPR).

According to MahaRERA, these 500-plus projects, among the 750 that were registered in January in Maharashtra, have not uploaded their QPRs three months after registration. Owing to this, warning notices will be issued to these projects, most of which are in the Mumbai Metropolitan Region (MMR).

What happens to the homebuyers?

Once project registrations are put under suspension, the developer cannot market, advertise, or sell apartments in the project until the suspension order is revoked.

According to MahaRERA officials, since the action is against only those projects registered in January 2023, only a few homebuyers will be affected. Also, their rights remain intact once the suspension is lifted by MahaRERA following necessary compliance by the developers.

The focus is currently on projects registered in January. MahaRERA officials say they plan to catch the defaulters early. "It is not like projects registered a year ago do not have such violations. However, we want to catch the new lot fresh. For the old lot, we have issued more than 19,500 notices for non-compliance for which case-by-case action is under process," said one of them.

What does it mean for lenders?

According to MahaRERA, once a project is placed under suspension, all activities relating to construction, marketing, advertising and selling will be put on hold. "We will also notify the banks post-suspension of the project. Banks, where the developers maintain the designated escrow accounts are maintained, will be informed," said a MahaRERA official.

As per Section 4 (2) (D) of the Real Estate (Regulation and Development) Act, 2016, promoters are required to open a separate account in a scheduled bank exclusively for the project. Under the RERA regime, 70 percent of the amounts realised from real estate project allottees (buyers) is to be deposited in a separate RERA-designated no-lien, no-charge bank account to cover the cost of land and construction for the given project.

Quarterly progress reports not being updated a national problem

QPRs allow homebuyers to track the actual status of construction and progress of projects every quarter, which enables them to decide whether or not to invest in the project.

The problem of builders not uploading QPRs is a national problem not limited to Maharashtra. It is prevalent in Gujarat, Uttar Pradesh and Karnataka as well.

The Gujarat RERA levies penalty on developers on a per-day basis in case of delay or for failing to upload QPRs. In Uttar Pradesh, UPRERA had also warned developers about levying penalties if they do not submit these reports.

UPRERA in April this year had asked developers to upload the QPR of their projects on its portal by April 20, failing which a penalty of Rs 10,000 per quarter was to be imposed. The authority noted that many promoters do not upload QPRs regularly on the portal, which is contrary to the objectives of the Real Estate (Regulation and Development) Act.

Sources in UPRERA said that until the end of April 2023, almost 760 promoters had been penalised about Rs 18 crore collectively for non-filing of QPRs with the portal.

Action under what provisions?

Under the act, developers are required to submit project status, the financial position of the project, booking numbers, annual reports, quarterly reports, and other details.

"As per Section 11 of the RERA Act, the developers after receiving the RERA registration number of their project are expected to upload quarterly progress reports. However, the compliance level is very low in the fresh projects registered in January 2023. Out of the over 700 registrations, more than 500 have not given any quarterly update, and around 200 developers have given some or the other type of update," a senior MahaRERA official told Moneycontrol, asking not to be named.

The official added, "We will issue them notices and ask them to comply, and if they do not comply and upload quarterly progress reports, we are planning to suspend their registration number until they do. This will ensure that they cannot further market or sell for such projects. However, if the compliance is done after notices, no further action will be taken,"

Non-compliance ratio

On February 18, Moneycontrol reported MahaRERA's statement of around 75 to 80 percent of ongoing registered projects in Maharashtra not regularly uploading QPRs on project status and finances. Owing to this, the complete data about a particular project was unavailable in the public domain on the MahaRERA website. MahaRERA had also issued notices to over 19,500 projects over non-compliance.

Owing to these 19,500 notices sent by MahaRERA, Forum for People's Collective Efforts had asked MahaRERA to compensate homebuyers as they were compelled to take a decision on buying a home based on incomplete information made available by the developers on the regulatory website.

Sanjay Deshmukh, nodal officer for MahaRERA's lapsed project vertical, during a panel discussion on February 17 said, "As per the RERA Act, a developer is supposed to submit quarterly and annual reports. However, for about 75-80 percent of the ongoing projects, quarterly reports were not uploaded. We have issued notices and developers have begun the compliance process."

According to MahaRERA data, over 21,500 projects are currently underway and close to 40,000 have been registered in the last six years.

How many projects are registered in Maharashtra?

According to MahaRERA data, over 40,000 projects have been registered in Maharashtra in the six years since the authority came into being in May 2017. Of these, more than 12,000 projects have been completed, while more than 20,000 have complaints against them.

What more can MahaRERA do?

Trupti Daphtary, an advocate and solicitor based in Mumbai, said, "It is a violation of Section 11 of RERA Act if a developer fails to make quarterly project updates as required under the Act and consequently will be liable to penal action."

She added, "However, apart from it, the MahaRERA portal can have a separate tab for those developers who have failed to comply with the QPRs providing the information of the details of non-compliance for the benefit of the allottees. This will help homebuyers take a better decision, and along with these educational videos and other material could be circulated for the benefit of developers to educate them about the consequences for not providing quarterly progress reports."