Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament the provisions of which came into effect from 1st May 2017. As per this act, central and state governments, both are required to notify their own rules. The main objective of the government in getting this enacted is to protect the interests of home buyers and to boost the investments in the real estate sector. It is expected that RERA will revolutionize the manner in which residential housing projects are planned, marketed and sold across the nation.

What changes would RERA bring in the real estate and housing sector?

When it comes to purchase of any residential apartment or any other real estate transaction, it has always been lopsided in the favor of builders and developers. The guidelines and rules under RERA will create a fair and equitable base between the buyers and property developers. It aims to bring more transparent and accountable system in the primary real estate market.

Role of the state governments:

RERA makes it mandatory for each state and union territory to form its own real estate regulatory body and frame the rules by which the regulatory bodies are governed. However, the federal structure of our country would allow the states to form their own rules and framework which could possibly dilutive in nature. Worries are still there among a section of real estate developers with regard to the level of complexity in obtaining permission by proper adherence to the regulatory framework.

Impact of RERA on home buyers:

Following are the some of the buyer centric regulations as laid down in RERA

  • Once the houses/properties are allotted to the buyers, the developer should inform them of any minor addition or alteration.
  • Any major alterations, if the developer wants make can be done only after the consent of at least 2/3rd of the total allottees is obtained.
  • Without registering the project with RERA authorities, the developers cannot launch any advertisement about the project.
  • If the existing developer would want to transfer the majority rights in the project to any 3rd party, the same should be communicated to all the allottees and consent of at least 2/3rd of the total allottees must be obtained.
  • RERA makes the developers to be liable for any defects in the property for the next 5 years. Any defects that are substantially concerned with the quality of the construction should be handled and corrected by the developer for the subsequent 5 years of the sale.

RERA – Highlights of the Act:

1. Registration of properties made compulsory:


RERA makes it mandatory that every estate project where the total area to be developed exceeds 500 sq meters or more than 8 apartments is proposed to be developed in any phase of the project should be registered with the regulatory bodies of the respective state.

In case of existing ongoing projects, registration should be made if the completion certificate (CC) or occupancy certificate (OC) has not yet been issued.

2. Title representation with the respect to the land:

Developers/promoters of the project should execute a positive warranty on their legitimate title and right interest on the land. In case of any defect discovered later, this will come to the rescue of the property buyers.

3. Reserve account:

As per RERA, property developers are required to open a separate reserve account to park minimum 70% of all the project receivables. The amount reserved in such account can only be spent towards land and construction expenses and will be required to be certified by a professional, probably a CA.

4. Continuous disclosure by developers:

Under RERA, developers are required to periodically submit the details of project’s progress to the RERA authorities. And the same will be updated onto the RERA website enabling buyers to track the status of the project.

5. Penalty:

To ensure the strict adherence to the act, stringent penal provisions which may be extended to imprisonment and/or a penalty of up to 10% of the project cost.

Bottom line:

Before you go for buying any property, it is strongly recommended to go through the website of respective state’s RERA authority.

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