What is RERA: A Complete Guide

In 2016, the Indian Parliament passed RERA Act (RERA full form: Real Estate Regulation Authority). The act, which went into effect on May 1, 2017, is a significant law that has completely changed the Indian real estate industry. Its objective is to enhance transparency, accountability, and efficiency in the real estate market by controlling and fostering the operations of real estate developers, builders, and agents.

What is RERA?

The Indian Parliament enacted RERA as a statute to oversee and advance the real estate sector. The legislation requires that a regulatory body be established in each state to supervise how the rules are put into practice. This organization oversees making sure real estate developments are registered, developers follow the rules, and purchasers’ interests are protected.

All real estate transactions, such as the buying, selling, and transferring of properties, including residential, commercial, and industrial developments, are covered by the law. Before their projects may be advertised or sold, developers must register them with the regulating body.

What Is the Purpose Of RERA?

The main goal of RERA is to protect home buyers’ rights while boosting the real estate sector’s accountability, openness, and efficiency. The legislation controls the behavior of developers, builders, and real estate brokers to accomplish this. This law intends to-

  • To guarantee that real estate projects meet the promised specifications, are completed within the specified time frame, and remain deviation-free, it is essential to oversee them.
  • The regulatory authority’s guidelines, rules, and regulations must be followed by developers.
  • Developers must disclose all relevant information about the project, including land details, approvals, and construction progress, to improve transparency in the real estate industry.
  • It is necessary to protect the interests of homebuyers by ensuring that developers do not engage in misleading practices or misuse collected funds.
  • There must be a grievance redressal mechanism for homebuyers to report any concerns they may have against developers.

What Are the Salient Features Of RERA?

The salient features of RERA are as follows:

1.      Establishment of a regulatory authority:

To monitor the implementation of the RERA Act, a regulatory authority is established in every state of India. The regulatory authority is accountable for ensuring that real estate projects are registered, developers comply with the regulations, and the interests of buyers are safeguarded.

2.      Registration of projects:

To promote transparency and accountability in the real estate sector, developers are obligated to register their projects with the regulatory authority before advertising or selling them. The registration process necessitates the submission of all necessary documents, such as land titles, approvals, and construction plans.

3.      Disclosure of information:

To ensure transparency, developers are obligated to reveal all pertinent details related to their projects, including information about the land, building approvals, and construction progress. Additionally, they are mandated to establish and maintain a website containing comprehensive information about the project, such as construction status and details about funds raised and spent.

4.      Escrow account:

To guarantee that the funds collected from homebuyers are utilized only for the designated project, developers must create a separate escrow account for each project. Withdrawals from the account can only be made for the specific purposes outlined in the act, and the account cannot be used for any other purpose except for the designated project. The collected funds from homebuyers must be deposited into the escrow account.

5.      Carpet area:

Developers must market and sell their properties based on the RERA carpet area as per the RERA Act. Carpet Area is the net usable floor area of an apartment or flat plus the internal walls of the apartment. What the RERA carpet area does not include is external walls, exclusive balcony or verandah area, exclusive open terrace.

6.      Timely completion of projects:

The developers are obligated to complete their projects according to the promised specifications and on time. Any deviations from the agreement will incur a penalty for the property developer.

What Are the Penalties for Non-Compliance With RERA?

Developers that fail to comply with RERA may face harsh fines. The following are some of the consequences of noncompliance with RERA:

1.      Imprisonment:

Developers who breach the act’s restrictions face up to three years in prison.

2.      Fine:

Developers who breach the act’s rules may be penalized up to 10% of the project’s cost.

3.      Revocation of registration:

If a developer fails to comply with the conditions of the act, the regulatory body has the jurisdiction to withdraw the project’s registration.

4.      Compensation:

Homebuyers who incur damages because of the developer’s failure to comply with the legislation are eligible for compensation.

How Are People Taking in The Changes Caused By RERA?

The Indian real estate sector has undergone substantial transformations due to the implementation of RERA. Homebuyers have warmly received the act because it offers them a mechanism for addressing grievances and safeguards their interests. However, developers hold diverse opinions about the act.

Several developers have embraced the act since it fosters transparency and accountability within the sector. They anticipate that the act will enhance trust and confidence among homebuyers, eventually leading to benefits for the sector.

The developers have criticized the act for being too strict and causing delays in project approvals, along with increased compliance costs, which they think has made the sector less competitive.

However, RERA has had a significant impact on the real estate sector, despite mixed opinions. It has led to increased transparency and accountability, which has boosted the trust of homebuyers in the sector. Furthermore, the act has stimulated competition among developers, resulting in better quality and affordability of homes.

Below are few notable example where RERA authority have taken the action on the developer

In June of 2022 UP RERA imposed a penalty of 1.05 crore on nine developers in UP for noncompliance of its order.

Also in October of 2020 MahaRERA slapped a penalty of 1 crore on builder for various violations including failure to register the project under RERA

Final Overview

In conclusion, RERA has been a crucial factor in revolutionizing the Indian real estate industry by advocating transparency, accountability, and efficiency. The act has laid down a regulatory framework that ensures the protection of homebuyers’ interests, timely completion of projects, and fair business practices among developers, builders, and agents.


Despite differing opinions among developers about the act, it has unquestionably fostered greater trust and confidence among homebuyers, which will ultimately benefit the sector in the long run. RERA is a welcome move for the Indian real estate sector, and its impact is expected to persist in the years to come.