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Revisiting Real Estate Regulation And Development Act 2016 and its Impact on Homebuyers.


After recovering from the depressing and damaging lockdown last year which impacted our economy drastically, the real estate sector is again reviving up even after the surge in cases. It can be seen from this and the sudden increase in price in real estate in past decades that this sector is rewarding and can be very helpful to act as an alternative to risky investments in the stock market and help to multiply the hard-earned money.
With this surge, it is even more important to look after the regulations and acts which help to regulate this rewarding sector. Before the passing of the RERA Act, the purchases or building of properties were covered under the Transfer of Property Act, 1882 and the Consumer Protection Act, 1986. But due to major loopholes in it regarding lack of legal sanctions to prevent wrongs against home buyers, RERA which stands for Real Estate Regulatory Authority was established by the Real Estate (Regulation and Development) Act, 2016. With this introduction, an interesting question pops up, i.e. how does RERA helps the home buyers against such practices?

What is RERA?

RERA stands for Real Estate (Regulation and Development) Act and it came in effect from 1st May 2017. With the passing of this act, a norm for strict compliances started, which had to be followed by the developer, builder, and construction companies.[1]
It aims to guard the welfare of home buyers[2] and also increase investments in the property sector[3] with the help of provisions such as timely completion of the project, transparency in the sector, etc.

Major problems faced by Homebuyers before RERA

Before the passing of RERA, practices like misappropriation of funds, construction delay, price, construction quality, ownership, and litigations, etc were practiced which discouraged the buyers to get involved in the real estate[4].

Due to no authority to look after the conduct of developers, the builders would refuse to adhere to the agreement and violated the provisions such as cancellation or withdrawal policy. There were incidences where the builder stopped the projects midway causing financial losses to the buyers and customers.

The builders would often compromise with the quality of project execution; The builders/agents would, at the time of construction, deviate from the original plans, grossly violate all the approved sanctioned project plans and building plans, and thereby fail to provide the home buyers with completion and occupancy certificates.[5]

Effect of RERA towards problems faced by Homebuyers

The first compliances for the developers after the passing of RERA was to register themselves under RERA, registration of projects over eight apartments or size of over 500 sq. mt. by the developers at each stage of construction independently with the state Tribunal became mandatory which prevented the builders to break out from the agreements signed with the home buyers. This helped the buyers to raise a sense of security in their minds towards their properties.

A cap of 10% of the total investment for the initial payment and a ban on advertising a project before registration were mandated after RERA. This would prevent any major breaches and deceit which was common in this sector. RERA also provided strict punishments such as liability to compensate the buyer for the loss with the amount decided in the initial agreement signed between the parties.
RERA will also help in the standardization of sale agreements, with the help of providing a standard model of the sale agreement and prevent the developers to put punitive clauses. With the help of RERA, a proper definition of carpet area for the house is given which prevents and deceits by the construction companies or developers.

One of the significant misappropriations of money of buyers was when the builders used the money for one project to complete another project, which resulted in default and delay in the delivery of the property. With the new norms, this became impossible owing to the newly added section 32 in RERA.
With regards to penalties, there are several stringent provisions in RERA which in turn would have a positive effect to boost the confidence of home buyers towards real estate and further help in improving the sector.

With the help of RERA, several people were granted justice for example in the case of Mr. Rohit Ahuja &Anr. v. M/s EMAAR MGF Land Limited where the delivery of booked flat by the plaintiff was delayed and caused financial loss to the buyer, the authority ordered to compensate the buyer and therefore helped in keeping the trust of homebuyers in the sector.

Penal Provisions Under RERA


Although RERA is a very successful act in itself and has helped to clean up the wrongs in the real estate sector, the act also attracts some disadvantages with it.

RERA is causing a supply-demand imbalance because of a lot of compliances which results in the completion of only 2-3 projects within 2 years.[6]

Another disadvantage of RERA is the increase in the price of the properties. Due to various measures in the act such as 70% investment in the escrow account, a cash hindrance could be formed and could result in price hiking due to lack of cash.


In the past few decades urbanization in a developing country like India is at its peak and therefore a sector such as real estate which was in the past so vulnerable to deceits should need an act like RERA.

With various advantages and some shortcomings, RERA is an excellent step towards the formation of statutory authority to prevent wrongs and provide justice in times of need and will certainly bring changes and help with the social and economic growth of our country.

Although the act is a landmark and considerable step, increasing buyer’s awareness towards provisions in the act and knowledge about, what is right for them should be conveyed by the government.

[1] Real Estate (Regulation and Development) Act: An Overview, https://www.mondaq.com/india/real-estate/796102/real-estate-regulation-and-development-act-an-overview (last visited Apr 8, 2021).
[2] The Real Estate (Regulation and Development) Act, 2016.
[3] Real Estate (Regulation and Development) Act: An Overview, https://www.mondaq.com/india/real-estate/796102/real-estate-regulation-and-development-act-an-overview (last visited Apr 8, 2021)
[4] Shikha Dimri, Regulation of Real Estate Transfers and Protection of Buyers’ Interest: A Perspective on Legal and Institutional Developments in India, 22 THINK INDIA JOURNAL (2019)
[5] Sunil Dhawan, Builders rush for Occupancy Certificates to duck the new Real Estate Act Read more at: https://economictimes.indiatimes.com/wealth/real-estate/builders-rush-for-occupancy-certificates-to-duck-the-new-real-estate-act/articleshow/58380574.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst, Dhawan, Apr. 20, 2018
[6] ABDUL ASIF KHAN, A study of Real Estate Regulation Act (RERA), 2016: Implementation and Issues, 9 Parishodh Journal , 7864–7865 (2020)
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Author: Vaibhav Kesarwani

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