RERA: Will it restore the trust of home buyers?

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The Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect from May 1, 2017. RERA is effective on all the residential and commercial projects in all the states of India. RERA is an Act passed by the Parliament and seeks to protect interests of home-buyers and simultaneously to boost investments in the real estate industry. The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal. 

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RERA: Back ground

Key Provisions under RERA

  • RERA makes it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution.
  • Ongoing projects which have not received completion certificate on the date of commencement of the Act will have to seek registration within 3 months.
  • Application for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA.
  • On successful registration, the promoter of the project will be provided with a registration number, a login id, and password for the applicants to fill up essential details on the website of the RERA.
  • In case of failure to register, a penalty of up to 10 percent of the project cost or three years' imprisonment may be imposed upon the builder.
  • Real estate agents who facilitate selling or purchase of properties must take prior registration from RERA consultants. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.

RERA: Benefits to home buyers

It has been a persistent complaint by the home buyers that real estate rules and transactions were in favour of the builders and home buyers in almost all the cases suffer loss. Government of India, in view to protect the interests of home buyers passed and implemented RERA which requires developers to remain transparent throughout.

  • After the registration for the project is done by the Regulatory Authority, the builders or developers have to publish all the details of their projects on the website of the Regulatory Authority.
  • The registration is valid for the period indicated in the project application as the time required for completion of the project. Once this period is over, the Regulatory Authority has a right to revoke the registration granted for this project.
  • If the builder or developer has not handed over the property by the date mentioned in the  agreement for sale or if the registration granted by the Regulatory Authority has been suspended or revoked, the buyer has the right to withdraw from the project.
  • If the buyer chooses to withdraw from the project, he/she has the right to be compensated for the full amount he/she has paid till date along with interest. Buyer gets this right as soon as the possession date has passed. There is no need to file a complaint or case at this point. The developer and/or builder is supposed to compensate the buyer as soon as he/she makes the request.
  • If the buyer chooses not to withdraw from the project, he/she has the right to be compensated with interest for every month of delay. The exact interest amount will differ from state to state and depend on the state regulations issued.
  • If the builder or developer is not voluntarily compensating the buyer, he/she has the right to file a complaint before the Regulatory Authority. Each state Regulatory Authority is supposed to appoint an officer who performs the functions of a judge. The officer will conduct an inquiry and pass an order once the officer has decided whether the buyer is actually supposed to get the interest or money spent.
  • If the builder or developer has already obtained the completion certificate by July 2017, they do not have a duty to register their project under this law.
  • Under RERA Builder must inform the allottees about any minor addition or alteration in the project and must take consent of 2/3rd allottees about any other addition or alteration.
  • It is not possible for the builder to launch or advertise about the project before the project is registered with RERA
  • If Builder plans to transfer majority rights to third party, it is necessary to take consent of the 2/3rd allottees.
  • Resident Welfare Association (RWA) has to be formed within specified time or 3 months after majority of units are sold.
  • Builders have to create Reserve Account to avoid diversion of funds to other project. One of the primary reasons for delay of projects was that funds collected from one project, are diverted to other new projects. Under RERA, builders are now required to park 70% of all project receivables into a separate reserve account. The proceeds of such account can only be used towards land and construction expenses of the project for which they have been collected.
  • Now the builders have to inform the home buyers about the carpet area, built-up area and super built-up area. It will make the cost calculation more transparent as the home buyers will now know what they will actually get. It is now mandatory for the developers of all ongoing projects, to disclose the size of apartments on the basis of carpet area (the actual inside area within four walls) including the carpet area of rooms, kitchen, toilets. 
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Demerits: Home buyers still facing problem

RERA will impact adversely on the Real Estate activity which is already reeling under the pressure of low demand, financial crunch due to various factors including Demonetization. Indirectly it will impact upon the home buyers.

  • This is evident as after implementation of RERA many new and ongoing Real Estate projects in the country especially in Delhi NCR, Mumbai, Pune and other metro cities have received a set back and are still lying in the primitive stage, although their date of possession has lapsed.
  • Number of top rated builders and promoters have landed in jail. A few of the defaulting projects in Delhi NCR are the projects promoted by Unitech in Noida and Gurgaon; Proplarity Bizlife Sector 62 Noida; Cosmic Corporate park, Cosmic cruise in Noida promoted by Cosmic group; Insolvency of Jaypee Group; Amrapali Group seeking support of other builders to construct its projects. All this has added to the woes of the buyers instead of resolving their problems as they continue waiting for their possession.
  • RERA despite all its good intentions will create initial backlog in Real Estate industry.
  • Project cost after implementation of RERA has gone up which will be recovered from the buyers who are already suffering from delays and non-delivery of the projects
  • Builders after creating the Reserve Account with 70% of funds collected, will be operating with a liquidity crunch.
  • The project launch time will increase now as no builder can launch a new project without making it RERA complaint and the concept of soft launch which offers good discounts to home buyers before the launch of the project, will not be available now.
  • Till the time RERA specialised forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal, are established for the resolution of disputes pertaining to home buyers, the aggrieved party will have no recourse to other consumer forums and civil courts, on such matters. Although RERA seeks to resolve dispute on fast track, its success depends upon the timely setting up of these new dispute resolution bodies and how expeditiously these disputes are resolved.
  • In the beginning, a lot of work is to be done to get the existing and new project registered. Details such as status of each project executed in last 5 years, promoter details, detailed execution plans, are to be prepared.

RERA in states and Union territories
As on February 1, 2018, nine states namely Kerala, West Bengal, Arunanchal Pradesh, Assam, Meghalaya, Mizoram, Manipur, Nagaland, Tripura have not notified rules under RERA.


Following states have implemented and notified rules under RERA:

Name of State of Union territory
Date of RERA notification
October 29, 2016
Uttar Pradesh
October 11, 2016
October 31, 2016
Dadra and Nagar Haveli
October 31, 2016
Andaman & Nicobar Islands
October 31, 2016
October 31, 2016
Daman & Diu
October 31, 2016
Madhya Pradesh
October 22, 2016
November 24, 2016
April 19, 2017
Andhra Pradesh
March 28, 2017
February 25, 2017
May 1, 2017
May 1, 2017
May 18, 2017
Tamil Nadu
June 22, 2017
April 28, 2017


Enactment of law and its strict implementation is done by two different agencies. Implementation of RERA has no doubt landed many builders in jail but the problem of home buyers are not solved as they are still unable to get the possession of the flats, offices, shops. Many builders like Unitech are offering possession without obtaining completion certificates. On the top of it, the possessions handed over in 2018 are forcefully getting accepted by the home buyers on the back date of July 2017 – date before implementation of RERA.


Accordingly, authorities responsible and linked to RERA must come out of their cozy comforts and must implement the ACT as it is needed.  

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