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What is RERA?

RERA stands for the Real Estate Regulatory Authority. In May 2016, the Indian government passed the RERA Act to improve transparency in the home-buying process. After that, it was brought into action to concerns of builders, homebuyers, brokers, and other real estate industry stakeholders. It has adopted numerous reforms since its founding, and more are on the way.

In this article, we are going to discuss the RERA Act with its importance, need, and many other things.

What is the RERA Act?

RERA stands for the Real Estate Regulatory Authority. It was developed to increase transparency in real estate. The RERA Act was enacted to address issues within the sector. Its goal is to cut down on project delays and mis-selling. Currently, all builders or developers must register with RERA before initiating a project.

The RERA aims to protect home buyer’s interests while also encouraging investment in the real estate sector. The Rajya Sabha passed the RERA law on March 10, 2016, followed by the Lok Sabha on March 15, 2016, and it took effect on May 1, 2016.

On May 1, 2016, 59 of the 92 sections were notified, with the remaining provisions taking effect on May 1, 2017. The Act requires the central and state governments to notify their rules under the Act every six months.

Why did the RERA become necessary and important?

For a long time, the homebuyers complained that the real estate transactions were unbalanced and heavily favored by developers. RERA and the government’s model code seek to promote a more equal and fair transaction between property seller and buyer, particularly in the main market. It is expected that RERA will facilitate real estate purchases by increasing accountability and transparency, provided that states do not compromise the central Act’s terms and spirit. The RERA will be the first regulator for the Indian real estate business. The Real Estate Act requires each state and union territory to establish its regulator and set the rules that govern how the regulator operates.

Implications of RERA Act and Authority

There are various implications of the RERA Act and Authority. Some of them are as follows:

  1. Each state government must establish the Real Estate Regulatory Authority to manage real estate development.
  2. Set the aim to minimize the rampant project delays and mis-selling.
  3. The standards need to be established to protect the buyer’s and developer’s interests.
  4. In the real estate business, transparency and accountability are expected to be established.
  5. The Act’s provisions cover both residential and commercial properties.

Impact of RERA Act

After implementing the Real Estate Act of 2016, it is no longer possible to register a project unit’s sale deed in the sub-registrar office without first acquiring Occupancy Certificates or Completion Certificates. Unit registrations are currently taking place without being checked. It is taking place in the absence of Occupancy or Completion Certificates. The Department of Stamps and Registrations is aware of the RERA Act’s implications. Still, it has failed to take the necessary actions to stop the illegal sale deed registrations of such properties.

There are various impacts of the RERA Act. Some of them are as follows:

  1. Fewer projects will be launched as promoters and builders assess the impact of the Real Estate Act of 2016. However, since there would be less competition, honest promoters/builders/developers will profit from this scenario.
  2. The 32 sections added to the Real Estate Act 2016 would increase financial discipline in the real estate business.
  3. After the RERA Act is implemented, dishonest builders will disappear because they would not compete in the market.
  4. After the Act’s implementation, developers will be required to follow several procedures if they intend to make changes to a project after it has commenced. Short-term chaos may erupt in the real estate business, but it will improve client confidence and encourage them to invest more in the long run.

Key Features of RERA Act

There are various key features of the RERA Act. Some of them are as follows:

Increased Transparency

Under the RERA Act, real estate developers must deposit 70% of the cash authorized for project development into a selected bank account. Each project will have its dedicated account so that the developer does not divert funds from one project to another. Also, it is now required for the developer to supply all pertinent project information, such as plans, layout, approvals, subcontractor list, timelines, etc., so that customers may easily access it as needed.

Improved Oversight of Projects

A State Real Estate Regulatory Authority will be established after an individual state has ratified this Act. This state-level agency would be in charge of overseeing all commercial and residential real estate transactions in the state and providing redress to injured parties on an individual basis. According to the State Real Estate Regulatory Authority, anyone who violates the new laws and regulations will face penalties and fines.

Redress for project delays and after-sales service

Before the RERA Act, project delays frequently resulted in losses in the form of missing or delayed tax benefits, which the developer would now pay instead of the home buyer. It means that the developer is responsible for paying the interest on a house loan that the buyer is servicing for a property whose possession has been delayed. Also, buyers can now legally demand that the developer provide after-sales services for project flaws recognized within one year of the property’s transfer.

Compulsory Registration

The real estate projects must be registered with RERA. The regulator would oversee the projects. Also, when RERA receives complaints, it cancels the registration.

Clear legal definitions

Before the RERA Act, it was common practice to promote the size of a property based on the super-built area. The super-built area lacked a legal definition, which sometimes deceived homebuyers. According to the law, the homebuyers may evaluate the property because all information would be provided based on the carpet area.

Quantifying the tax benefit losses due to late property handover

The tax incentives available if you apply for and are approved for a house loan fall into two categories: Section 80C and Section 24 of the Income Tax Act of 1961. The Section 80C tax benefit is tied to the principal payment on a home loan, capped at Rs. 1.5 lakhs per year. On the other hand, section 24 includes all loan interest payment advantages and has a yearly cap of Rs. 2 lakhs.

RERA rules investors should know

There are various RERA rules that investors should know before using them. These are as follows:

Right to information about the property

It is an important benefit of the RERA statute in favor of the house buyer. The developer has the right to share all project details, such as plan layout, execution plan, completion stages, competition status, etc.

Registering project with RERA

RERA Act must require all residential and commercial real estate projects with more than 500 square meters of land, or eight flats, to register with the RERA Act.

Builders or developers must publish all facts such as sanctioned plans, layouts, project location with a clear division of property, carpet area, number and amount of garage, etc. As a result of RERA, builders must obtain all necessary approvals before advertising or selling any property, which will help to reduce fraud.

Escrow Account

Customers will have to deposit 70% of their money into an escrow account, which the developer will hold. The funds will be utilized exclusively for the project in which we invested. It ensures that the builder does not divert funds to other projects because they can withdraw funds from this account after receiving approval from the engineers and chartered accountants they designate.

Five years of defect liability period

In any structural problem or low quality, the developer will be responsible for rectifying such defects for a term of five years under RERA. So, suppose a defect in the quality of the materials used in constructing the property is discovered. In that case, we can hold the developer and builder accountable for all sub-standard concerns and request that they be repaired or compensated.

Sale Agreement Standardization

Earlier, the sale agreement was written so that homebuyers were fined for any default, but equivalent defaults by promoters were not penalized. However, under RERA regulations, a common model sale agreement must now be drawn between promoters and homebuyers to maintain equality and protect buyers from different penalties and costs.

Quarterly updates on construction progress

Every three months, builders/developers must input project facts such as the number and kind of units sold, government approval received, approval pending list, and completion date. Moreover, if the property is the subject of any litigation, the builder and developer must be attached any court records.

Carpet Area

A property’s area is frequently assessed in three ways: carpet area, built-up area, and super built-up area. As a result, there can be a significant disparity between what a buyer pays and what he receives when purchasing a home. However, developers are now required to declare the size of their units based on carpet area.

Failure to complete possession on time

If the promoter fails to complete or give possession on time, the promoter is responsible for paying the actual amount paid by us if we decide to terminate the agreement. However, if we desire to remain in the arrangement, the promoter will be required to pay interest each month that we are late in receiving possession.

Title Representation

Promoters must provide proof of clear title to the property and project. If a flaw in the title to a property is discovered, we have the right to seek compensation, and the amount of restitution is not limited.

Agent Registration is Compulsory

Before selling or advertising any property, any real estate agent must now register with RERA. They must follow all regulations, including keeping books and records, not engaging in unfair commercial practices, and not making any misleading statements, whether oral or written.

Approval for alteration in sanctioned plans

When a builder wishes to change the plans and specifications of the individual flat, he can only do so with permission. If a builder wants to change the layout of the entire project or the common areas of society, he requires two-thirds of the total buyers.

Grievance Redressal

Any buyer, promoter, or agent who has a grievance about the project can submit a complaint with RERA. Within 60 days, the state’s real estate regulatory department will attempt to resolve the disagreement. If we are not pleased with RERA’s judgment, we have 60 days to submit a complaint with the Appellate Tribunal. Even after that, he may complain to the high court and the supreme court if he is dissatisfied.

Incorrect information to home buyers

We have the right to request a refund if we paid an advance payment for a project based on misleading information in a prospectus or advertisement. If we wish to continue with the project, the builder should pay the penalty, which may be up to 5% of the property’s cost.

Penalties under the RERA Act

There are various penalties for the Developers, real estate agents, and homebuyers under the RERA Act. These are as follows:

Offense-wise penalties for Developers

There are various penalties and compensation that may be imposed on promoters.

For non-registration of a project The penalty of up to 10% of the project’s anticipated cost.
For non-compliance with the orders of the authority Each day of default carries a penalty that can total up to 5% of the project’s anticipated cost.
For Violated of others Act’s provisions The penalty of up to 5% of the project’s anticipated cost.
For non-compliance with the Appellate Tribunal’s directives A penalty of up to 10% of the project’s estimated cost, or imprisonment for up to three years, or both, may be imposed for every day.

Offense-wise penalties for Real Estate Agent

There are various penalties and compensation that may be imposed on a real estate agent are listed below.

For non-registration under the project, he is selling Defaults of Rs. 10,000 per day may result in a penalty of up to 5% of the property’s cost.
For violating the appeal tribunal’s orders or directions Imprisonment for up to a year, with or without a penalty of up to 10% of the project’s anticipated cost, or both.
For violating the RERA Act’s orders or directions A penalty of up to 5% of the estimated worth of the property whose sale or acquisition was facilitated may be applied on a daily basis.

Offense-wise penalties for homebuyers of RERA registered project

There are various penalties and compensation that may be imposed on homebuyers are listed below.

Any violation of the RERA Act’s orders The penalty for the period in which defaults continue, which can total up to 5% of the cost of the unit or building.
Disobedience to the appellate tribunal’s orders or directives For each day that such defaults persist, a year in prison with or without a penalty is imposed, which may total up to 5% of the apartments or building’s cost, or both.

How to file a complaint under RERA?

We believe that now that RERA has been implemented, it will protect our interests. However, the most immediate question is how to submit a complaint or a case under the new RERA regulations.

As a result, each state has its own set of documentation and procedures that must be followed. The application may also be completed online using the accessible format. The complainant must supply the following information to file a complaint:

  1. The applicant’s and respondent’s personal information
  2. The project’s registration number and address
  3. A concise statement of the facts and the basis for the claim


RERA is an important step forward in the fight against rogue developers. The RERA ACT, 2016, was introduced in response to delays in project delivery, the use of substandard building materials, and the periodic alteration of approved plans. There was no regulator and no set of rules in effect up until now.

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