Before the Real Estate (Regulation and Development) Act, 2016 (RERA), India’s real estate sector faced widespread issues—project delays, lack of transparency, and unfair dealings between builders and homebuyers. Many buyers paid huge sums for properties that were either delayed or never delivered.
To address these concerns, the Government of India enacted RERA to establish accountability, ensure transparency, and promote professionalism in the real estate sector. The Act came into force on 1 May 2017, aiming to protect homebuyers and boost investor confidence.
How Does RERA Work?
RERA established a state-level regulatory authority in every Indian state and union territory to oversee real estate transactions. Its primary objectives include:
- Regulating and promoting real estate projects and transactions.
- Ensuring transparency and timely project delivery.
- Protecting consumer interests.
- Resolving disputes quickly through RERA authorities and Appellate Tribunals.
Every real estate project that exceeds 500 sq. metres or involves more than 8 apartments must be registered under RERA before being advertised or sold. Builders are required to provide detailed disclosures such as:
- Project layout, approvals, land status, and schedule of completion.
- Names of promoters, contractors, and architects.
- Quarterly updates on project progress.
How Did Real Estate Laws Function Before RERA?
Before RERA, the sector was primarily governed by local laws and the Consumer Protection Act. However, the absence of a centralised law led to issues such as:
- Builders diverting funds from one project to another.
- False advertising and misleading information.
- No fixed accountability for project delays.
- Difficult legal remedies for homebuyers.
With RERA, these gaps were bridged by defining clear responsibilities for both developers and buyers.
What Are the Key Provisions of RERA?
The RERA Act contains several transformative provisions that have redefined how real estate projects operate in India.
Mandatory Registration of Projects
Developers must register their projects with the state RERA authority. Without registration, they cannot market or sell any unit. This ensures only legally compliant projects enter the market.
70% Escrow Rule
Builders are required to deposit 70% of the project funds in a separate escrow account, which can only be used for construction and land costs. This prevents fund diversion and ensures timely completion.
Advance Payment Restriction
A developer cannot demand more than 10% of the total cost from the buyer as advance before signing a sale agreement.
Project Timeline and Delay Penalties
Developers must provide a specific timeline for project completion. Failure to deliver on time results in penalties and interest payable to the buyer.
Defect Liability Period
Developers are liable to fix any structural defect or quality issue for five years after handing over possession.
Real Estate Appellate Tribunal
If a buyer or promoter is dissatisfied with the RERA authority’s decision, they can appeal before the Real Estate Appellate Tribunal, ensuring accessible and time-bound justice.
How Has RERA Changed Real Estate Transactions in India?
RERA has brought a major cultural and operational shift to the real estate landscape.
Increased Transparency
Developers must disclose all project-related details on the RERA website, allowing buyers to verify approvals, timelines, and ownership before investing.
Improved Accountability
Builders now face stricter penalties for defaulting or making false claims. Buyers can hold them legally responsible for delays or fraud.
Enhanced Consumer Confidence
With better regulation and information access, homebuyers now feel more secure investing in under-construction projects.
Reduced Litigation
Dedicated RERA authorities and tribunals provide quicker, less expensive dispute resolution than traditional courts.
Boost to the Real Estate Sector
By ensuring fair practices, RERA has revived investor confidence and helped attract institutional investments, strengthening the real estate ecosystem.
How Does RERA Protect Homebuyers?
RERA has made homebuyers’ rights stronger than ever before.
Here’s how:
- Right to Information: Buyers can access all project details such as layout, progress, and registration certificates.
- Right to Timely Possession: If a project is delayed, the buyer can claim interest or withdraw with a full refund.
- Right to Compensation: Buyers can seek compensation for losses caused by misleading advertisements or false promises.
- Right to File a Complaint: Any aggrieved buyer can file a complaint directly with the state RERA authority.
What Are the Obligations of Builders and Developers Under RERA?
Developers are now bound by law to follow ethical and transparent practices. Their key obligations include:
- Registering every eligible project before launch or sale.
- Providing truthful information in advertisements and brochures.
- Maintaining an escrow account for project funds.
- Updating quarterly progress reports on the RERA portal.
- Delivering possession on the promised date.
- Rectifying any structural defects reported within five years.
How Does RERA Impact Real Estate Agents?
RERA doesn’t regulate only builders; real estate agents must also register with the state authority to operate legally.
Their obligations include:
- Providing buyers with accurate project information.
- Avoiding misleading claims or unregistered project promotions.
- Maintaining fair business practices.
- Assisting both buyers and developers in compliance.
This regulation has helped professionalise the brokerage industry, improving credibility and reducing malpractices.
What Are the Penalties for Non-Compliance Under RERA?
RERA has introduced strict penalties to ensure compliance and discourage violations.
- Developers: Up to 10% of the project cost or imprisonment for false information or non-registration.
- Agents: Fines up to ₹10 lakh for unregistered dealings.
- Buyers: Penalties for defaulting on payments or breaching contractual obligations.
These penalties have created a deterrent effect, ensuring all stakeholders take the law seriously.
What Are the Challenges in RERA Implementation?
Although RERA has been revolutionary, challenges remain:
- Inconsistent State Implementation: Some states have diluted RERA provisions or delayed establishing authorities.
- Low Awareness: Many homebuyers are unaware of their rights under RERA.
- Limited Digital Access: Some state portals lack user-friendly interfaces and updated data.
However, with growing awareness and judicial support, these issues are gradually being addressed.
How Has RERA Improved Legal Remedies for Homebuyers?
Earlier, homebuyers had to rely on long consumer court processes. Now, RERA provides a specialised mechanism for resolving disputes within a maximum of 120 days.
The Appellate Tribunals and High Courts have also supported RERA’s intent by delivering pro-buyer judgments, reinforcing its role as a consumer-centric law.
What Lies Ahead for RERA in India?
As the real estate sector continues to grow, RERA will play a key role in ensuring long-term sustainability and fairness. Future reforms may focus on:
- Enhancing digital transparency through unified national RERA portals.
- Strengthening penalties for recurring defaulters.
- Integrating RERA with land and building approval systems.
These improvements can make RERA even more effective in promoting trust and accountability in Indian real estate.
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