What is RERA Act or Real Estate (Regulation and Development) Act?

The Real Estate (Regulation and Development) Act of 2016 (also known as RERA Act) was enacted to regulate the real estate sector in India. The Act was passed in 2016 & it came into force in May 2017.

RERA Act is actually a model Act passed by the Central Government. Each state has to notify its own Act based on the Central RERA Act. This is because land is a concurrent subject.

The real estate sector in India has been characterised by the absence of professionalism & standardisation and lack of adequate consumer protection. Therefore, the Act was passed to:

  • promote uniformity and standardisation in the real-estate sector
  • protect the interests of the consumers (homebuyers)
  • bring accountability and transparency to the real estate sector.
  • establish a fast-track dispute-resolution mechanism
  • create investor confidence in the real estate sector.

Though the Consumer Protection Act, 1986 was available to protect the interests of home buyers, it was inadequate to address their concerns. Hence, the need for the RERA Act was felt.

Major features of the RERA Act:

  1. Establish a regulatory authority for the real estate sector. (Real Estate Regulatory Authority or RERA)
  2. Establish state level RERAs as well.
  3. The promoter has to register their real-estate projects with RERA.
  4. Real-estate agents dealing in these projects also have to register with RERA.
  5. The promoter must upload the details of the project on the RERA website to infuse transparency.
  6. The promoter is not allowed to sell projects without the requisite approvals from the local authorities.
  7. The promoter can advertise and sell their projects only after the registration of the project.
  8. The amount collected by the promoter from the buyers of these projects must be deposited in a separate escrow account and must be used only for the construction of that project. The promoter shall withdraw in proportion to work complete with a certificate from either engineer, architect or CA
  9. The Buyers are entitled to a refund in case of delay in delivery of the project.
  10. The Act imposes a stringent penalty on promoter, real estate agent and also prescribes imprisonment.
  11. The RERA Act does not apply to projects which are very small (the area of the land which is going to be developed is less than 500 square meters and the number of apartments is less than eight.) This exemption might differ from state to state.
  12. RERA had brought in uniformity in definitions for important components of real estate,
    like, “carpet area”, “common areas” etc

Thus, the RERA Act is intended to protect the interests of the homebuyers and protect them in case of delays, late delivery and frauds.

The Act will trigger a turn around in the real estate sector with increased formalisation and improved consumer confidence. Though we will have to wait for a few years to gauge the impact.

But, there have been instances of dilution of central provisions in state-enacted laws. Also, as of May, 2018,  only 14 out of the 20 states, which notified RERA, have a functional website and only three states have a permanent regulator. 

You may also read: Insolvency and Bankruptcy resolution code explained



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2 comments on “What is RERA Act or Real Estate (Regulation and Development) Act?


I eagerly await for your article since they simply the complex subject for a common man. It is easier for a person who does not necessarily have background of economics or law to understand your articles. But as far as this article on RERA is concerned, I personally feel this article is too late and quit inadequate.


Vinod, thanks for the feedback. I will try to supplement this article with more information. Keep reading 🙂


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