What is RERA?
The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, is a significant piece of legislation passed by the Indian Parliament to regulate the real estate sector. It came into effect on 1st May 2017 with the aim of protecting homebuyers and enhancing transparency, accountability, and efficiency in real estate transactions. RERA is applicable to both residential and commercial projects and mandates the establishment of a Real Estate Regulatory Authority in each state and union territory.
Why was RERA Introduced?
Before RERA, the Indian real estate market suffered from several challenges:
- Lack of transparency in project approvals and delivery timelines
- Frequent project delays and cost escalations
- Misleading advertisements and unclear contractual terms
- No formal grievance redressal mechanism for buyers
The sector needed reform to restore buyer confidence and create a fair environment for all stakeholders. Hence, RERA was introduced as a regulatory framework to bring order, protect consumers, and promote long-term investment.
Objectives of RERA
The key goals of the RERA Act include:
- Promoting transparency in project dealings
- Ensuring timely completion and handover of properties
- Regulating the conduct of builders and agents
- Establishing a standard legal framework for contracts
- Providing a dedicated dispute resolution mechanism
Chronological Framework: How RERA Works?
1. Project Registration
All real estate projects above 500 sq. metres or having more than eight apartments must be registered under RERA before any marketing or sale activity begins. Developers must provide:
- Land ownership documents
- Approved plans and layout
- Timeline of project completion
- Details of contractors and architects
2. Escrow Account for Funds
To prevent fund diversion, RERA mandates that 70% of the project funds collected from buyers be deposited in an escrow account. This money can only be used for land and construction costs of that specific project.
3. Advance Payment Restriction
A builder cannot demand more than 10% of the property’s cost as an advance from the buyer before signing a registered agreement for sale.
4. Clearances and Approvals
All necessary approvals (from municipal authorities, fire departments, etc.) must be obtained and disclosed by the developer. Changes to project plans require approval from two-thirds of the allottees.
5. Real Estate Agent Registration
Even real estate agents must register under RERA to ensure ethical marketing practices and accountability.
6. Timely Possession and Compensation
If a developer fails to deliver the project on time, the buyer is entitled to compensation or refund, along with interest.
7. Dispute Redressal
Each state has a RERA authority and an Appellate Tribunal to handle disputes between buyers, builders, and agents.
Benefits of RERA
For Homebuyers:
- Assured project delivery timelines
- Transparent cost breakdown and legal status
- Access to legal remedies through the RERA portal
- Protection against false claims and advertisements
For Builders:
- Greater buyer trust and credibility
- Improved financial discipline through escrow regulations
- Legal clarity and standardised processes
For Real Estate Agents:
- Professional validation and structured regulations
- Enhanced trust from clients and builders
Implementation Status in Indian States
Maharashtra, Karnataka, Uttar Pradesh, Gujarat, and Tamil Nadu have active RERA websites and enforcement mechanisms. States like Maharashtra (MahaRERA) are considered models for implementation due to high compliance and resolution rates.
However, a few states still lag in terms of:
- Creating robust digital platforms
- Staffing the regulatory authorities adequately
- Resolving complaints within timelines
Challenges Faced by RERA
Despite its positive impact, RERA faces several implementation issues:
- Weak enforcement in some states due to lack of infrastructure
- Diluted provisions in state rules compared to the central Act
- Non-inclusion of older projects, leaving many buyers helpless
- Delays in grievance redressal, reducing buyer satisfaction
To overcome these, there is a need for uniformity in state laws and better technological infrastructure.
Future Outlook and Recommendations
- Digital Integration: Real-time project updates via RERA portals
- Stricter penalties for non-compliance and misreporting
- Inclusion of old projects to protect all homebuyers
- Capacity building for fast and effective dispute resolution
As more developers and buyers understand the benefits of RERA, the Indian real estate sector is poised for a more transparent and ethical future.
Conclusion🎯
RERA has emerged as a powerful reform to streamline India’s real estate industry. It promotes ethical practices, safeguards buyers’ rights, and fosters professionalism. While the journey is still ongoing, with full implementation and awareness, RERA is destined to make the dream of fair homeownership a reality for millions of Indians.
📚 Frequently Asked Questions (FAQs) on RERA
1. Is RERA applicable to ongoing projects?
Yes, if the project had no completion certificate by 1st May 2017, it falls under RERA regulations.
2. Can I file a complaint online under RERA?
Yes, most state RERA authorities offer online complaint filing facilities on their official websites.
3. Does RERA cover commercial properties?
Yes, RERA applies to both residential and commercial real estate projects.
4. What if the builder does not register the project under RERA?
It is a punishable offence. Buyers can report it to the RERA authority, and the builder may face penalties or even imprisonment.
5. Can a builder change the layout after RERA registration?
Only after securing consent from two-thirds of the allottees and approval from the RERA authority.
6. How can I check if a project is RERA-registered?
You can visit your state’s RERA portal and search by project name, developer, or registration number.