TG-RERA Secretary D Srinivas Reddy Details Crackdown on Illegal Pre-Launch Real Estate Schemes
In an exclusive interview, D Srinivas Reddy, Secretary of the Telangana Real Estate Regulatory Authority (TG-RERA), has provided critical insights into the regulator's ongoing efforts to combat fraudulent activities in the real estate sector. He emphasized that the authority is rigorously monitoring and penalizing builders who engage in unlawful practices such as pre-launch and One-Time Payment (OTP) schemes, which violate the Real Estate (Regulation and Development) Act, 2016.
Are Unlawful Practices Like Pre-Launch and OTP Schemes Becoming Rampant?
Reddy addressed concerns about the prevalence of these schemes, stating that while some promoters attempt to test the market through "pre-launch," "soft launch," or "expression of interest" offers before project registration, such activities are inherently illegal. He clarified that the terminology used does not alter the legal status, as any solicitation for an unregistered project is prohibited under Section 3 of the Act. However, he noted that consistent enforcement actions, including show-cause notices and penalties, have significantly reduced open violations, preventing the practice from becoming rampant.
Do Established Developers Also Resort to These Practices?
The authority maintains a uniform enforcement approach, applying the law equally to all developers regardless of their size, brand value, or market standing. Reddy explained that Section 3 of the RE(R&D) Act makes no distinctions between large and small players; the ban on pre-launch marketing is absolute and applies across the board. He acknowledged that pre-launch activities have been attempted by promoters of varying market stature, but TG-RERA treats all violations similarly, ensuring no preferential treatment.
Homebuyers are strongly advised to verify the RERA registration status of any project on the official TG-RERA portal before making financial commitments to avoid risks associated with unregistered schemes.
How Many Complaints Have Been Received Regarding OTP Schemes?
In the last six months, TG-RERA has not received a large volume of complaints specifically labeled as "OTP schemes." However, several complaints have been filed concerning pre-launch offers and marketing of projects prior to mandatory registration under Section 3. Reddy emphasized that regardless of whether a scheme is termed an "OTP offer," "exclusive preview," or "prelaunch," the legal test remains the same: advertising, marketing, or selling without prior registration constitutes a violation. The authority has acted firmly in such cases, imposing penalties under Section 59 of the Act, which are linked to the estimated project cost.
What Are the Punishments for Such Offenses Under RERA Guidelines?
TG-RERA adopts a strict and structured enforcement approach when promoters violate the mandatory provisions of the RE(R&D) Act. Upon discovering pre-registration activities, the authority issues immediate show-cause notices and initiates legal proceedings. If a violation is established, Section 59 empowers TG-RERA to impose penalties up to 10% of the estimated cost of the real estate project. This penalty structure ensures consequences are proportionate and economically significant, deterring violations regardless of the project's scale.
What Steps Is TG-RERA Taking to Curb This Menace?
To enhance monitoring, TG-RERA has signed a Memorandum of Understanding (MoU) with the Advertising Standards Council of India (ASCI). This collaboration involves ASCI scrutinizing real estate advertisements across digital platforms and reporting suspected violations to the authority for examination and action. This partnership has strengthened regulatory oversight over indirect marketing forms. Additionally, TG-RERA does not rely solely on formal complaints; it takes suo motu cognisance based on credible material, such as digital promotions, online campaigns, or WhatsApp circulations. Regular "RERA Alerts," public advisories, and caution notices are issued to educate homebuyers about the risks of pre-launch schemes and the necessity of prior registration.
This comprehensive approach underscores TG-RERA's commitment to protecting homebuyers and maintaining integrity in Telangana's real estate market through vigilant enforcement and public awareness initiatives.
