The Supreme Court recently expressed dissatisfaction over the implementation of RERA, calling it “disappointing”. The court called the RERA authority a failure to protect homebuyers and effectively regulate the real estate sector.
Real Estate (Regulation and Development) Act, 2016 (RERA)
- Land and colonization is a state subject, but to protect home buyers and ensure transparency in the real estate sector, Parliament passed the Real Estate (Regulation and Development) Act, 2016 (RERA).
- This is an important law to reform the real estate sector of India.
- Under this Act, the Real Estate Regulatory Authority (RERA) was established, which aims to regulate and promote the real estate sector.
Objectives of Real Estate Regulatory Authority (RERA)
- Regulation and promotion of the real estate sector.
- Ensuring transparency and efficiency in project sales.
- Protection of consumers from fraud.
- Establishment of faster dispute resolution mechanism.
Key provisions of Real Estate Regulatory Authority (RERA)
Establishment of Regulatory Authority
- State RERA: Registration of projects, protection of buyers, compliance of rules.
- Appellate Tribunal: Appeals on RERA decisions and dispute resolution.
Financial safeguards
- Escrow account: 70% of buyers’ money will be used only for construction.
- Down payment limit: No more than 10% advance can be taken without a written contract.
Homebuyers protection
- Carpet area: Charging will be based on net useful floor area.
- Timely project completion: Penalty on delay.
- Structural defect liability: Responsibility for repairs for 5 years.
Penalty provisions and legal compliance
- Uniform interest rate on delay.
- Penalty up to 3 years for developers, up to 1 year for agents/buyers.
- Challenges in Real Estate Regulatory Authority (RERA) implementation
- Complex and costly registration process – RERA registration is lengthy and costly, making developers reluctant to launch new projects.
- Compliance difficulties for small developers – Small developers are unable to fully comply with RERA rules due to limited resources.
- Inconsistent implementation across states – RERA is not equally effective across states, leading to gaps in regulatory enforcement.
- Inadequate infrastructure and human resources – Lack of proper infrastructure and staff in many states leads to delays in registration and complaint redressal.
- Lack of awareness among stakeholders – Many buyers and developers are unaware of RERA provisions, leading to inadequate use of the rules.