RERA has been a game changer for homebuyers in India. Real Estate (Regulation and Development) Act, 2016 (RERA) has made home buying less intimidating by prioritizing home buyers. Before enactment of the RERA, the real estate sector was largely unregulated, unfettered, leaving homebuyers with little protection. The RERA was introduced to bring transparency, accountability, and timely possession to the homebuyers.
RERA addressed the problem of unregulated and delayed real estate projects by mandating the registration of all the real estate developments. No promoter can advertise, market, book, sell, or offer for sale any apartment without obtaining registration under the RERA, and non-registration attracts heavy penalties, including fines up to 10% of the project cost and even imprisonment for continued default. Now, developers are required to provide all the necessary information, such as timelines, actual carpet area, and approved plans, on public websites. In case of delay, buyers are entitled to receive interest for the period of delay or seek a refund along with compensation. Furthermore, no structural alterations or changes in sanctioned plans can be made without the consent of at least two-thirds of the allottees of the real estate project.
One of the most significant provisions under the RERA is that 70% of the amounts realized from allottees must be deposited into a separate bank account exclusively for the real estate project. Withdrawals from this account are permitted only in proportion to the percentage of completion of the project and must be certified by an engineer, an architect, and a chartered accountant. The promoter cannot divert these funds for any purpose other than the concerned project and this provision has significantly curtailed the diversion of funds from one project to another. This has also significantly reduced the incidence of stalled projects and improved financial discipline within the sector.
Homebuyers are no longer required to undergo prolonged civil court proceedings for relief, now every state has established a RERA Authority where aggrieved buyers can file complaints, often through the online portal. The RERA envisages disposal of such complaints within 60 days, orders passed by the RERA Authority are enforceable as decrees of a civil court, and an appeal lies before the Real Estate Appellate Tribunal (REAT). Numerous homebuyers have won cases and received their flats or refunds. However, in some states, implementation delays and backlog of cases remain a practical challenge.
Even real estate agents are now required to register under RERA. Registered agents are required to maintain proper records and are prohibited from making false representations about projects. Non-compliance attracts penalties under the Act. This has helped reduce malpractice and misleading practices in property transactions.
Strengthening Buyer Protection
Almost after a decade, the RERA has restored confidence in the real estate sector, public access to project details on state RERA portals has increased transparency and improved due diligence by both buyers and financial institutions. Thereby, affordable housing projects have also witnessed improved timelines and regulatory oversight.
While implementation gaps do exist and certain issues continue to evolve through judicial interpretation, the RERA has fundamentally shifted the balance of power in favour of homebuyers and transformed the real estate sector into a more regulated and accountable industry.
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