What is the RERA Act?

Update - 2022.10.17
The Real Estate Regulatory Authority (RERA) Act was introduced in 2016 to protect the interests of the home buyers. The main aim of RERA is to provide relief to the buyers from the malpractices of unfair builders. RERA specifies certain norms for building and development of real estate which enhances the transparency in transactions in the real estate sector.

What is RERA?

You can interpret RERA in two ways:

  • Real Estate Regulatory Authority, and
  • Real Estate (Regulation and Development) Act, 2016

Real Estate Regulatory Authority is the authority whose work is to:

  • Protect the interests of both the home buyers and the promoters and promoters.
  • Regulation and promotion of the real estate sector.
  • Ensure that the sale of the plot, apartment, or building or sale of a real estate project proceeds efficiently and effectively.
  • Establish an adjudicating mechanism for speedy dispute redressal of the complaints raised by the home buyers.

Note: In every State and Union Territory, separate Real Estate Regulatory Authorities are formed for speeding things up.

Why is the RERA Act needed?

With RERA, the Government has made a repository of the best practices in the real estate sector for the first time. Consumers’ interests are taken care of, covering all commercial and residential real estate. There was an overwhelming need for regulations and uniform guidelines in a scenario where the consumer grievance related to real estate keep piling on.

Some broad objectives that are covered by the Act are as follows:

  • To bring transparency and efficiency in the process of buying and selling of Real-estate.
  • To provide legal cover and to protect consumers’ interests/rights in the RE sector
  • To ensure that there is a defined process and efficient handling of disputes
  • To define and standardize terms and measures, so as to bring all concerned parties to the same level of understanding, thereby also lending certain standardization across builders/projects. This will further help consumers to compare diverse projects and developers with ease.
  • Defining duties, liabilities and penalties for builders/developers and brokers/intermediaries.
  • Setting up timelines for registration processes and dispute resolution.
  • RERA mandates all developers/builders to upload all relevant information regarding a project – viz. Details of land titles, approvals, construction progress, names of brokers etc, on their website. This information shall then be easily available in one place.

Features of RERA Act

Real Estate Regulatory Authority has brought some order in the industry with its various provisions:

  • Establishment of the Real Estate Regulatory Authority and Real Estate Appellate Tribunal for speedy dispute redressal between the home buyer and the promoter/builder.
  • Making digital registration of the project of the builder and builder and real estate agent compulsory to make everything transparent and open.
  • Digitization of all records from the year 2016 on-wards and accessible to everyone without RTI.
  • Quick and cheap online dispute redressal system. For registering the complaint, you can file the complaint online without the help of a lawyer.
  • Sale on the basis of the Carpet Area and not Super Built-Up Area.
  • Sanctioned Plans can only be changed with the prior consent of either the home buyer or 2/3rd of the Resident Welfare Association.
  • Super penalty for false advertisement.

Key terms defined under the RERA act 2016

Some of the key terms defined in this Act are as follows:

Advertisement, Agreement for Sale, Allottee, Apartment, Architect, Building, Carpet Area, Commencement Certificate, Common Areas, Completion Certificate, Development, Development Works, Engineer, Estimated Cost of Real Estate Project, External Development Works, Family, Garage, Immovable Property, Interest, Internal Development Works, Local Authority, Occupancy Certificate, Person, Planning area, Project, Promoter, Prospectus, Real Estate Agent, Real Estate Project, Sanctioned Plan

Is RERA successful?

According to the Ministry of Housing and Urban Affairs (MoHUA) website since its inception, the highest number of projects have been registered by Maharashtra RERA with 34,280 projects accounting for 43.6% of all projects registered in the country, followed by Gujarat with 9,822 projects (12.49%), and Karnataka with 4,783 projects (6.08%). However, the fastest growth is seen in Andhra Pradesh and Telangana with an approximately 1200% increase in project registration.

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Effects of RERA act 2016

Is RERA really beneficial for the home buyer? Do all builders follow the regulations set by RERA? If you are wondering about the impact of RERA in actuality then we have tried to summarize the difference below:


Breathtaking visual representations and tall promises in the real estate industry go quite hand in hand. When it comes to advertising about the building projects it was very much needed

Before RERA Act, 2016 

Builders made tall promises and enumerated dream promises. After a few years, they changed the plan layout and made fools of the home buyers. The approval for change in the sanctioned plan required the determination of the local municipal authority, which by the way is easily obtainable.

After RERA Act, 2016

Builders make promises which they know they can fulfill. They know that the change in the sanctioned plan requires the approval of the home buyers or the Resident Welfare Association.

Speedy Dispute Redressal Mechanism

Where to go in case of builders doing frauds? It was very much needed to regulate this segment as buyers used to face a lot of problems in case of builders not holding their end of the deal.

Before RERA Act, 2016

Home buyers had to go to the civil courts or high courts as and when needed to report their complaint against the builder/ promoter. Moreover, civil court procedures are highly confusing for a common man. Hence, arises the need for a good lawyer to win the case against the builder. Multiple instances have been there where the home buyer also went to the consumer court and fought the case for almost 10 to 15 years!

After RERA Act, 2016

Every State has its own RERA Court and Appellate Tribunal. Hence, the home buyer has only to go to the RERA Court for real estate cases. Moreover, in practical instances, it only takes a mere 2 to 3 months to get the judgement from a RERA Court or Appellate Tribunal.

Online Paperwork and Digitization

With digitization touching every industry, why should real estate be any different?

Before RERA Act, 2016

Online and offline entries were made for the paperwork in the local municipal offices as per the applicable laws. However, to get access to those records, the home buyer has to apply for the RTI procedure, which grabs the attention of everyone, from the local authorities to the builder himself.

After RERA Act, 2016

All the project, promoter, and real estate agent records are available on the State RERA website. Anyone can check the authenticity of the project or promoter or real estate agent by getting access to the registration number. The registration number is always mentioned on the project advertisement as per the RERA Act, 2016.

Legal Documentation and Sale Deed Language

Legal documentation and sale deed language is something which is very tricky and it is here maximum frauds happen.

Before RERA Act, 2016

Less legal terms were made at the time of agreement between the home buyer and the promoter/ builder. The Promoter tried to conceal information at the time of agreement.

After RERA Act, 2016

All Legal documentations are now mentioned in each State RERA Rules. The language of the agreement and the sale deed is as per the Rules only.

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Carpet Area Defined Under RERA Act 2016

The Real Estate (Regulation and Development) Act, 2016 has mandated the developers on how to sell their apartments depending on the carpet area:

  • According to the Act, carpet area is the total area of the floor that can be used within the walls of the apartment. This does not include areas like open terrace, shafts, balconies, etc.
  • This normalization of the carpet area definition will ensure that buyers are not mislead by the unlawful promoters.

As the loading factor is high, the saleable area can be inflated by the developer. This will allow the developer to reduce the rate per square feet on the saleable area that is inflated. This is extremely misleading as the home purchasers get happy assuming that they are getting amazing rates. However, the flat size never changes, only the loading factor does.

Using the standard for carpet area will ensure that there is a certainty on the usable area. This also helps in the analysis of cost per square feet. Comparison between the different projects also becomes easier.

What properties need to be RERA Compliant?

Things that must be considered to understand if a property is RERA compliant are mentioned below:

  • If the area of the property is more than 500 square meters, the builders should register it under RERA Act before launching or advertising a project on that particular property.
  • Builders must provide proof that 70% of the total payment has been deposited by them into a discrete escrow account instead of using it for some other investment.
  • Builders must get all the necessary consent from regulatory boards before advertising a new project. Discounts for early bird bookings and pre-launch offers will not be there anymore.

Every project has a unique RERA certification number that confirms that the project is greenlit by complying to the regulations set by the Real Estate Regulatory Authority.

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Penalties under RERA if found guilty

Those builders who flout the RERA regulations are penalized as per the norms below:

For Builders

Offence Penalty
Non-compliance with RERA Daily penalty upto 5% of the estimated cost of project
Non-compliance with Appellate Tribunal Imprisonment upto 1 year or 10% of the estimated cost of project, or both

For Agents

Offence Penalty
Non-registration of projects Rs.10,000 per day up to 5% of the approximate cost of the project
Non-compliance with RERA Daily penalty up to 5% of the project’s estimated value
Non-compliance with the Appellate Tribunal Imprisonment up to 1 year or 10% of the pr

Other Penalties under RERA

Under the Real Estate (Regulation and Development) Act, 2016 (RERA), there are certain offences for which applicable penalties are imposed.

Offence Applicable Section Applicable penalties
Breach of terms for which registration is obtained Section 9 (7) Cancellation of registration number of the agent.
Securing registration through fraud or misrepresentation
Violation of orders of Appellate tribunal Section 66 Jail term of up to 1 year or with fine up to 10 percent of cost of unit sold.
Violation of Section 9 and 10 of the RERA Act Section 62 Fine of Rs.10,000 per day during which the default continues extending up to 5 percent of cost of unit sold.
Violation of orders of RERA authorities Section 65 Fine up to 5 percent of the cost of unit sold.

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