Knowledge Base

Investors Vote
[Total: 36 Average: 4.8]

Article by Vikas Sharma

Real Estate Regulation (and Development) Act, 2016, or RERA was introduced by the Indian National Congress in 2013. The full form of RERA is the Real Estate Regulatory Authority that aims at the protection of home purchasers and sellers and boosting the real estate investments. On March 10, 2016, the bill of this Parliament of India Act was passed by the Rajya Sabha (Upper House). RERA is a progressive Act in the Indian real estate sector. It was effective from May 1, 2016. It contains various pro-buyer provisions and the establishment of regulatory authority for the settlement of grievances. The Act was expected to increase investor confidence in housing projects leading to increased home purchases.

Rules of RERA Rules
The RERA ( Real Estate Regulation and Development Act), 2016 under Section 84 proposed that the State Governments will set the rules to carry out the provisions associated with the Act within a period of six months from its date of commencement.

Through Housing and Urban Poverty Alleviation (HUPA) Ministery, the center released the general rules of the RERA Act, 2016 on October 31, 2016. All these rules apply to the Union Territories like Andaman & Nicobar Islands, Chandigarh, Daman and Diu, National Capital Territory of Delhi, Dadra & Nagar Haveli and Lakshadweep.

ALSO READ:  Top 10 Mega Real Estate Investments Delhi NCR

ALSO READ: Which payment plan is better for commercial property investment

These were the points covered under Real Estate Regulation and Development (RERA) Act, 2016
1. Authorization: Under the RERA Act, a regulator cannot build, invest, sell, advertise, or book a plot without registration. All the advertisements for investments should bear a unique project-wise registration number after the registration provided by the RERA.
2. Security: A minimum amount of 70% of the money of investors and buyers is to be kept in a separate account. Builders are then allotted this money only for land-related costs and constructions. Before the sale agreement is signed, the builders and developers cannot take more than 10% of the cost of the property as an advance payment.
3. Quality: Any issue faced by the builder must be rectified within 5 years of purchase. Within 30 days of the complaint, the issue must be rectified.
4. Fairness: Developers have been instructed by RERA that they are supposed to sell properties based on the carpet area instead of the super built-up area. Buyers are entitled to get the entire invested money in the case of delayed projects or they can also choose to be invested and receive investments every month on their money.
5. Transparency: Without the consent of the buyer, builders cannot make any changes to the plans of the project. They are also supposed to submit original documents only for all the undertaken projects.

The RERA Act (Real Estate Regulation and Development Act), 2016 is all-encompassing and aims to make the real estate sector a fairground for all stakeholders including agents, buyers, developers, and promoters. However, despite being a well-drafted Act, there are many loopholes in RERA that have to be addressed on a priority basis. Some of the shortcomings in RERA Act are as follows:

ALSO READ: Jewar Airport Impact on Delhi NCR Real Estate

ALSO READ: How To Know, Market Value of Property Yourself

1. There are no rules for approval of delayed projects
RERA Act puts emphasis only on imposing penalties on developers for untimely deliveries of projects. Whereas, vast majorities of the delay in the implementation of projects happen during the procedure of obtaining clearances and approvals from different authorities. Presently, there are about 50 irregular approvals that builders and developers need to acquire before initiating a project. The approximate time for obtaining all the approvals requires 1-2 years. For the delays, the RERA Act does not make the government agencies accountable but places the entire responsibility on developers. It has the absence of a strict policy to force authorities to fasten the procedure of granting approvals and meet timelines. Hence, such an exemption should be added under the appropriate provision.

2. Absence of strict deadlines
Regarding the deadlines to draft RERA rules and regulations, the central government has been completely lenient with the state government for the compliance of the center’s regulations. Almost all the states have diluted certain rules of all the 14 states that have met the deadline. This resulted in the defeat of the purpose of strengthening the real estate industry.

ALSO READ: How to Register a Property, Step by Step

ALSO READ: How To Know, Market Value of Property, Yourself

3. There are no provisions for a single-window clearance
Even if the Act proposes for the formation of a regulatory body, it does not state the establishment of a single-window clearance framework that is something the real estate industry is asking needing for a very long time.

4. Partiality
It will be difficult for the builders to sell units on the basis of carpet area for buildings that are currently under construction. In some places, the units have already been sold under the super built-up area that has caused several conflicts. Therefore, for the settlement of the conflicts, there is a need for a few exemptions to this effect. Moreover, the term ‘net usable floor area’ needs to be defined in the Act for further clarity.

5. Lack of clarity over the state-specific content
Certain provisions of various states are lacking clarity in the RERA drafts. Few states have failed to provide the fee submitted for the real estate agents’ registration and the detailed information of the paperwork. States like Karnataka, Uttar Pradesh, Tamil Nadu, Haryana, Gujarat, and Dehli framed rules that do not specify the content and form of audit certificates that are to be issued by the charted accountants, architects, and engineers. This results in the duplication of roles and overlapping of activities of different stakeholders that lead to inconsistent verdicts.

ALSO READ: Top 10 Best High-Rise Residential Societies For Living in Ghaziabad

ALSO READ: Top 10 Best High-rise Residential Societies For Living in Noida

6. Manipulation and Black money
The compulsion of depositing 70 percent of project money of the investors and buyers in an escrow account can be manipulated. The requirement of certification by a chartered accountant, an engineer, and an architect before the withdrawal of any amount is not effective since they are all paid by developers and builders and are likely to make reports in favor of the builders. Hence, there can be manipulation even with security rules. Further, the RERA Act also fails to address the issue of the investment of black money in the real estate business.

7. Higher costs of construction
The cost of construction and land of the project may be higher than 70 percent of the total cost of the project in many cases. This may result in the borrowing of funds to raise the project cost along with the interest rate by the builders. This will eventually increase the cost of the project making it difficult for the consumers.

ALSO READ: Top 5 Best Places for Living, Shopping & Business in Ghaziabad

8. Long Possession Timeline
Before RERA, developers had to give possession within 36 months from the sanction of the map by the competent authority, but after RERA comes in force, the developer can take a long timeline for completion/possession, such as 5-7-10-12 and more years. Which is a big drawback of RERA.

RERA Act is a constructive change in the real estate industry by increasing the accountability of the builders but the Act cannot be executed effectively until the inherent loopholes of the law are plugged immediately. To conclude, many procedures and branches will have to be updated along with the up-gradation of land records and framework. Conflicts may arise due to the interest of politicians who have a major stake in the real estate industry which might be a major roadblock. Any type of shortcomings in real estate laws can also disturb the market competition in the real estate sector that will affect the customers and economic growth rate of the nation.

ALSO READ: 6 Essential Things Related to TDS on Property Sales

ALSO READ: How To Double Your Money within 3 to 6 Years

Investors Vote
[Total: 36 Average: 4.8]


  1. The developpers is already delayed to hand over my unit for almost 2 years which make me lose a huge amount on rent and he is not even informing me when will be the handover ,I m not able to get any support from RERA to support me as an investors to protect my rights ,would you please instruct me whom I should contact in RERA

  2. The cost of the project should be certified by the Cost Accountants instead of Chartered Accountants. This needs modification.

    • The developer has collected 95%of the costs for just abt 40%construction.
      The project ‘s poss date is 1.5 yrs away + another 6 months for Covid-19.

      My money is losing interest and perhaps builder is getting benefits.

      RERA rejected my complaint on grounds that Agreement copy was not enclosed, even though, I offered to submit it next day. The opposite party didn’t even file one bit of paper.

      One-sided agreements btwn builder and buyer hv been ruled to be invalid by SC and NCDRC. But RERA refused to heed this.

      My appln for review is not being ack by RERA. No response to Twitter, emails and hard copy.

      Now I may hv to go for appeal.

      RERA just adds to the frustration of buyers. It is not acting in a fair, just and quick manner.

      Ramu 20/6/20

  3. During lock down is the developer to stop paying rent to owners for re development.
    Also gst is this to be bourn by owner or redeveloper

    • Yes, they can, according to force majeure act.

      COVID-19, an event of ‘Force Majeure’. Completion/Possession extended for 6 months for all projects expiring on or after 25.03.2020 by the Government

  4. I have paid in full and builder ready to give keys ,On joint inspection seepage cracks dampness in walls were observed with other defects .Builder says first take possesion and then I will rectify .Please sugest remedies

    • Ideally, the builder will provide you the checklist where you have to specify these things.
      I actually did the same mistake, I did provide him the checklist and he corrected 90% of the issue then he said that he will fix the remaining and made me sign the document. Now, I am chasing him every day and he is giving me excuses for the next day/next week.
      So it is always better to not accept possession until you are satisfied.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>


Lost Password