The Real Estate (Regulation and Development) Act (RERA) was introduced in the year 2016 and was passed by the Indian Parliament in 2017. RERA has created a revolution as it aims to bring accountability and transparency in the Real Estate Industry with strict and fair rules. The act proposes to achieve transparency by making every Broker, Real Estate Agent, Promoter, and Builder officially register themselves and their projects under RERA.
According to this Real Estate Act, any developer should give complete details of their project, starting from project title to saleable area, carpet area, etc. During this RERA Registration, the approximate date of completion should also be mentioned, and the developer should compulsorily apply for the completion certificate within the mentioned time frame. For strict enforcement of all the proposed RERA rules, every state has formed a separate body, Real Estate Regulator Rera which takes care of the law implementation and all the complaints of buyers and investors.
What Led to the Establishment of RERA?
Real Estate is one of the largest sectors in India that has witnessed rapid growth in the past 10 to 15 years. It has become a multi-billion-dollar industry flooding with hundreds of new projects every year. But with the growth comes the prominent problems. Various cases of real estate scams have started, like the Adarsh Housing Society Scam, Noida Land Title Scam, Karnataka Wakf Board Land Scam, Cooperative Group Housing Scheme (CGHS) Scam, Emaar Properties Scam, etc.
It has been in discussion for many years that all the scams and frauds in real estate are only because of its weak regulatory framework. There were no standard rules that had to be followed by buyers or builders, and there were no regulations for the setting of prices of real estate projects. The lower-class and middle-class people were the most affected as the builders always played with the people's sentiment of having their own house.
To end all such things, the Indian Government has finally introduced the Real Estate (Regulation and Development) Act 2016.
Impact of RERA on Buyers
Complete Access to all the Details of Projects
Before starting any construction project with 500 square meters or eight apartments or more, the builder of the project should compulsorily register the project under RERA. So, before investing in a project, the buyers can go through every detail of that project from the RERA website, details like what's the project name, project type, square feet on the whole and square feet of each separation, floor plans, and even a view on google maps about the location of the project.
Mention the carpet area
Another significant advantage is that the builders must mention the broker carpet area (i.e., area without the walls of the room) of every room in the house, including kitchen, bathrooms, etc. This is a major advantage for buyers because there is always a possibility for a 30%-60% difference between the carpet and saleable areas.
Transparency in Money
All the investments and advance payments that buyers and investors give must be stored in a separate bank account (escrow account). 70% of the investments of the project have to be stored here. A clear account of how the money is being spent has to be maintained. This way, the promoters would not use the money in other projects.
Guaranteed Clarity on Project Completion Dates
RERA has decided that the project should be submitted by the agreed-upon deadline. Upon failing to do so, the promoter/builder should either (1) return the entire money to the buyers along with interest or (2) pay interest for every month that the project is getting delayed. It is in the buyer's hand to choose any one of the above options. The interest rates for these cases should all be mentioned in the contract between the buyer and the promoter. It is best and safe to download the contract draft given by RERA.
Time-to-Time Updates on the Project Work
According to the RERA Act, the project's progress, the state in which work is currently going on, and all such details should compulsorily be updated by the builders, once in every 3 or 4 months. This makes the buyers or investors stay at peace as they can go to the RERA website and find out the project updates.
No Changes Could be Made without Informing
In many cases, the builders keep making changes to the project to save money even after taking the whole money from the buyers. The buyers have always been helpless to such changes. RERA has now made this a punishable offense. Any changes to be made must be approved by at least two-thirds of the buyers in that project. The new altered layouts and plans should again be uploaded to the website before executing them.
RERA's Quick Support in Filing Complaints
Every state has separate RERA authorities that regulate all the ongoing projects. They are always supporting buyers to handle any matters of dispute between the buyers and the promoters. RERA gave complete authority to buyers to file a complaint about any small or big issue faced by the buyers. After the RERA regulators give any order to the promoters regarding the buyer's problem, the promoter must follow the order and rectify the same within 2 months.
Impact of RERA on Builders
Before starting any project, the builder must register the project under RERA compulsorily. During the registration, the builders have to give them complete details, company, and the project they are registering for. They can't invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects without first registering it with RERA. And the registration will only be accepted after the RERA authorities cross-check all the details submitted by the builder. Hence, this stops the realty developers from committing any frauds, thereby giving opportunities to the right builders.
Good Medium for Builders to Show their Work
Every builder should compulsorily be a registered member in RERA and update a track of his/her previous and ongoing work. So, when a builder is starting a new project, more buyers and investors in that area would come forward in confidence after taking a look at his work on the RERA website.
High Market Share for Reputed Builders
Since all the previous projects of builders could be viewed on the RERA website by anyone, there is a high possibility for the buyers to prefer the projects based on the builder’s history on the website. Hence, reputed builders with multiple previous projects might have a higher market share.
Safe Investing Environment
With all the new rules and regulations implemented by RERA, a safe investing environment has been provided to investors, so more people are coming forward to invest in real estate projects.
Recovery of supply chain gap
The launch of the new project can be reduced as there are strict rules of not using the investments of one project on another so that the supply chain gap will be recovered, which is advantageous to builders and promoters.
Impact of RERA on Real Estate Agents or Brokers
Over the years, there have been many cases where people have been innocently cheated by fake brokers and real estate agents. But after the establishment of RERA, there is no place for such frauds. It is a must for every real estate agent to register himself/herself on the RERA website. Their details have to be provided, and RERA cross-checks the information. This way, people can differentiate between genuine agents and fraud agents by verifying their profiles in RERA.
Services Provided by RERA: Registration of Builders, Projects, and Real Estate Agents
Every state has an official RERA website of its own. On the website, every promoter and real estate agent can easily register themselves. Every new project can also be registered easily, and a unique registration number will be allotted to that project. The website is easy to access and open for all to get any information they want.
Services Provided by RERA: The Organization of Complaints
Every buyer or investor can file a complaint about any issue that they have with their builder. Every state has a RERA body that deals with these complaints. If the RERA authorities confirm your complaint as valid, they would immediately send a court order to the corresponding builder, asking him/her to pay the penalty or compensation or extra interest to the buyer facing the issue. If the builder does not execute the order within 2 months, the buyer has the right to file a complaint again. And this time, the RERA regulators would directly deal with it and make sure that justice is done to the buyer who had the issue.
Services Provided by RERA: The New Idea of Conciliation Forums
RERA introduced a new way of dealing with issues between buyers and promoters without involving court cases and all the paperwork. The buyer and the builder could be called for a meeting where a regulator from RERA mediates between them and tries to bring both the parties to a compromise about how to resolve the issue and move forward.
State Real Estate Regulation Authorities (SRERA)
Every state has an independent organizational body for RERA. Although the common rules under the RERA act have to be implied by all, every state has its own rules that differ from state to state:
Year of Enforcement of Kerala Real Estate Regulation and Development Rules: 2017
Number of Projects Registered: 541 registered projects (as of June 2021)
Tamil Nadu RERA
Year of Enforcement of Tamil Nadu Real Estate Regulation and Development Rules: 2017
Number of Projects Registered: 755 registered projects (as of 2020)
Year of Enforcement of Karnataka Real Estate Regulation and Development Rules: 10-07-2017
Number of Projects Registered: 4130 registered projects (as of June 2021)
Year of Enforcement of Telangana Real Estate Regulation and Development Rules: 31-7-2017
Number of Projects Registered: 3066 registered projects (as of June 2021)
Year of Enforcement of Maharashtra Real Estate Regulation and Development Rules: 08-03-2017
Number of Projects Registered: >25,000 registered projects (as of June 2021)
Year of Enforcement of Chhattisgarh Real Estate Regulation and Development Rules: 29-04-2017
Number of Projects Registered: 1,245 registered projects (as of June 2021)
Year of Enforcement of Odisha Real Estate Regulation and Development Rules: 07-10-2017
Number of Projects Registered: 478 registered projects (as of June 2021)
Year of Enforcement of Gujarat Real Estate Regulation and Development Rules: May 2017
Number of Projects Registered: 8580 registered projects (as of June 2021)
Madhya Pradesh RERA
Year of Enforcement of Madhya Pradesh Real Estate Regulation and Development Rules: 01-05-2017
Number of Projects Registered: 3929 registered projects (as of June 2021)
Year of Enforcement of Jharkhand Real Estate Regulation and Development Rules: 01-05-2017
Number of Projects Registered: 659 registered projects (as of June 2021)
West Bengal RERA
Year of Enforcement of West Bengal Real Estate Regulation and Development Rules: 16-07-2017
Number of Projects Registered: 1,286 registered projects (as of June 2021)
Year of Enforcement of Rajasthan Real Estate Regulation and Development Rules: 01-05-2017
Number of Projects Registered: 1543 registered projects (as of June 2021)
Uttar Pradesh RERA
Year of Enforcement of Uttar Pradesh Real Estate Regulation and Development Rules: 2016
Number of Projects Registered: 2923 registered projects (as of June 2021)
Year of Enforcement of Bihar Real Estate Regulation and Development Rules: 28-04-2017
Number of Projects Registered: 833 (as of May 2020)
Year of Enforcement of Haryana Real Estate Regulation and Development Rules: 28-07-2017
Number of Projects Registered: 381 registered projects (as of June 2021)
Year of Enforcement of Punjab Real Estate Regulation and Development Rules: 08-06-2017
Number of Projects Registered: 1038 registered projects (as of June 2021)
Himachal Pradesh RERA
Year of Enforcement of Himachal Pradesh Real Estate Regulation and Development Rules: 2017
Number of Projects Registered: 79 registered projects
RERA Appellate Tribunal
RERA Appellate Tribunal is formed to bring more transparency to the law structure. The real Estate Appellate Tribunal provides certain rights to the home buyers and obligates builders and developers to follow rules and regulations. Under the RERA Act, the Real Estate Authority and Appellate Tribunal are created for each state. If any wrongdoing is initiated by the realty developer, the home buyer can effortlessly file a complaint to this authority.
The Impact of Real Estate (Regulation And Development) Act Over the Years
In the years 2016 and 2017, when the RERA Act came into implementation, the real estate prices witnessed a decline as it was difficult for all builders, investors, and buyers to get used to the new system. Registering projects and registering promoters and real estate agents was something they had never done before, so it took a declining amount of work while everyone around the country started adapting to the new real estate rules and regulations.
Eventually, RERAs in individual states started taking form, and full enforcement of the rules and regulations started. Maharashtra, Uttar Pradesh, Gujarat, and Punjab were the first states to complete and execute strict rules and measurements in the real estate field.
RERA is now actively established in almost all the states. It has been a great advantage for the real estate industry. Every year thousands of project registrations are being done in the states. It has become an excellent relief for investors and buyers to have timely updates and details about the projects from the websites. Hundreds of complaints are being resolved, incorporating complete fair play in the real estate game.
Currently, 28 states and union territories have implemented RERA. The northeastern states recently agreed to the implementation of RERA but the full-fledged execution is still in progress.
Latest Updates Related to Real Estate (Regulation and Development) Act
As per the latest update, Industry body CREDAI has made a demand to the Ministry of Housing and Urban Affairs for the extension of validity of all existing approvals. CREDAI wrote a letter to the ministry that due to shortage of labour, commotion in the supply chain of raw materials, and other unanticipated factors would lead to the delay in the construction of projects, therefore they grant them some time.
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Frequently Asked Questions (FAQ's)
What is RERA?
RERA is the Real Estate (Regulatory and Development) Act introduced in the Indian Parliament in the year 2016 to eliminate real-estate frauds and ensure fair play in the real estate business in India.
What is the difference between Saleable Area and Carpet Area?
The saleable area is the total area of the house. The carpet area is the area of the house, eliminating the walls of the house.
Saleable area (SA) = Carpet Area (CA)+ Wall Area + Common Area
Can we file complaints to RERA in offline mode?
Yes, every state has RERA offices where complaints can be filed.
What are Defaulter Projects in RERA?
Projects that are due for approval by the government because of having pending payments (like land dues).
What is the official website of RERA?
Every state has an individual website according to the State’s Real Estate Regulation and Development Rules.