RERA – The Real Estate (Regulation and Development) Act, 2016
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About Real Estate Regulatory Authority (RERA)
The Real Estate (Regulation and Development) Act, commonly known as RERA, is a landmark legislation in India designed to enhance transparency and accountability within the real estate sector. It safeguards the rights and interests of homebuyers by introducing a robust regulatory framework. By simplifying processes and promoting trust between stakeholders, RERA creates a more secure and buyer-friendly real estate ecosystem.
Key Aspects of RERA:
Legislation: The RERA Act, 2016, is a significant reform-oriented law introduced to regulate and transform India’s real estate sector.
Objectives: RERA aims to enhance transparency, accountability, and efficiency while safeguarding homebuyer interests, ensuring fair transactions, and promoting timely project completion.
Structure: The Act mandates the establishment of a dedicated RERA Authority in every State and Union Territory to oversee and regulate real estate activities.
Mandatory Registration: All real estate developers are required to register their projects with the respective State RERA authority before launching or advertising new developments.
Functions: RERA authorities are responsible for registering projects and agents, addressing complaints, ensuring regulatory compliance, and resolving disputes, thereby creating a standardized process for buyers, developers, and agents.
Benefits: The Act delivers improved transparency, quicker dispute resolution, enhanced financial discipline, and greater empowerment for homebuyers.
In essence, RERA serves as a comprehensive framework designed to bring consistency, fairness, and trust to India’s real estate market.
RERA Intends
- To regulate and promote the real estate sector through a structured and transparent legal framework.
- To safeguard and protect the interests of consumers and homebuyers.
- To ensure a smooth and transparent flow of project-related information between promoters and purchasers.
- To enhance accountability of promoters toward purchasers and stakeholders.
- To bring uniformity, professionalism, and standardization across real estate transactions and business practices.
- To establish an efficient mechanism for fast-track dispute resolution.
- To promote fair practices, improve transparency, and reduce instances of fraud in the sector.
Project that come under RERA
Registration of Real Estate Projects under RERA Act, 2016: As per the provisions of the Real Estate (Regulation and Development) Act, 2016, every promoter or developer is mandatorily required to register all ongoing and new real estate projects measuring more than 500 square meters or 598 square yards, or where the total number of apartments exceeds eight units (inclusive of all phases), with the respective State RERA Authority. RERA registration is compulsory for both ongoing and new projects, as detailed below.
Ongoing Projects: Any real estate project that has not received a completion certificate as of 01/05/2017 is classified as an ongoing project and must be registered with the respective State RERA Authority in compliance with the Act.
New Projects: As per the RERA Act, all new real estate projects launched after 01/05/2017 must be registered with the relevant State RERA Authority prior to initiating any form of advertisement, marketing, promotion, booking, sale offer, or invitation to purchase any portion of the project.
Some of the major provisions of the Act
Under the provisions of the Real Estate (Regulation and Development) Act (RERA), every promoter is required to maintain a separate bank account for each registered project. Additionally, all registered promoters and builders must regularly disclose complete project details on the official RERA website, ensuring transparency and keeping buyers informed about construction progress and project timelines.
Homebuyers are required to pay for the property strictly based on the carpet area, defined as the area enclosed within the walls. Promoters are prohibited from charging buyers for the super built-up area, which includes common spaces such as lifts, balconies, staircases, and lobbies.
Registered promoters or builders must deposit 70% of the funds collected from homebuyers into a dedicated bank account, which can be utilized only for construction and land-related expenses. RERA also stresses the timely completion of projects; in case of delays, developers are liable to pay interest at 2% above SBI’s MCLR for the delay period.
After possession of the property, buyers have the right to report any structural or construction defects for up to five years, and the developer is obligated to rectify such defects. Disputes raised by buyers must be resolved by developers within 120 days of filing the complaint.
Developers cannot make any alterations or additions to the sanctioned building plan without informing at least two-thirds of the property owners and obtaining majority consent. The Act also restricts promoters from collecting more than 10% of the property value as advance payment from homebuyers.
Furthermore, if any discrepancy in the title deed is discovered at the time of possession, buyers are entitled to seek immediate compensation from the developer under RERA provisions.
The key facilities being provided to promoters are as follows:
- Registration of Real Estate Projects: Mandatory registration of ongoing and new real estate projects with the respective State RERA authority to ensure transparency and regulatory compliance.
- Registration of Real Estate Agents: Real estate agents must obtain RERA registration to legally facilitate property transactions and maintain professional standards.
- Quarterly Update Provision for Each Project: Promoters are required to submit regular quarterly updates on project progress, approvals, and financial status through the RERA portal.
- Extension of Real Estate Projects: Developers may apply for project extensions under valid circumstances, subject to approval by the concerned RERA authority.
- Complaints Filing: Homebuyers and stakeholders can file complaints with RERA for grievance redressal related to delays, non-compliance, or unfair practices.
Heavy Penalties
- Penalty for Non-Registration: Promoters who fail to register their projects under RERA are liable to pay a penalty of up to 10% of the project’s estimated cost. Additionally, providing false or misleading project information can attract a penalty of 5% of the project’s estimated cost.
- Legal Consequences for Promoters: Any violation of RERA provisions by promoters may result in imprisonment for up to three years, or a monetary penalty amounting to 10% of the project’s estimated cost, or both.
- Penalties for Real Estate Agents: Agents operating without RERA registration may be fined ₹10,000 per day, subject to a maximum limit of 5% of the total project cost.
- Severe Non-Compliance: In cases of serious RERA violations, developers may be subjected to a daily penalty of up to 5% of the project’s probable value until compliance is achieved.
- Non-Compliance with Appellate Tribunal Orders: Failure to adhere to orders issued by the RERA Appellate Tribunal can result in imprisonment for up to one year, or a fine of up to 10% of the project’s probable cost, or both.
Registration Duration
Registration of a real estate project under RERA is a relatively fast process and can usually be completed within a minimum of 3 to 5 working days. However, the actual timeline may vary depending on prevailing government procedures, document verification, and official approvals at the time of submission.