Real Estate Regulation Act 2016: A Game Changer for Indian Real Estate

Housing Society Law

Posted by Aditya Pratap Law Offices on 01 Mar 24

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Introduction: – A Revolution in Real Estate Sector

The Real Estate Regulation Act 2016 (RERA) has been widely hailed as a game-changer for the Indian real estate industry. Enacted to protect the interests of homebuyers and bring about transparency in the sector, RERA has brought about significant changes in the way real estate projects are developed, marketed, and sold in India.

In the annals of Indian real estate, the Real Estate Regulation Act, of 2016 represents a significant legislative milestone. This extensive statute establishes the Real Estate Regulatory Authority (RERA) to oversee the relationships between developers and buyers of real estate. Enforcing the Act’s provisions, the RERA ensures developers build according to approved plans, execute registered sale agreements with buyers, and give time-bound apartment possession.

What is the Real Estate Regulation Act 2016?

RERA is a landmark legislation introduced by the Indian government to regulate the real estate sector in the country. It aims to ensure accountability, fair practices, and timely delivery of projects by real estate developers. The Act also establishes a regulatory authority in each state to oversee the implementation of its provisions.

Key Provisions of the Real Estate Regulation Act 2016:

(i) Mandatory Registration: RERA makes it mandatory for all real estate projects with an area of more than 500 square meters or more than eight apartments to register with the respective state’s regulatory authority.

(ii) Disclosure of Information: The Act requires developers to provide detailed information about their projects, including land status, approvals, layout plans, and completion timelines. This ensures that homebuyers have access to all relevant information before purchasing.

(iii) Deposit of Funds in Escrow Account: RERA mandates developers to deposit a minimum of 70% of the funds received from buyers in a separate escrow account. This prevents developers from diverting funds to other projects and ensures that the money is issued for the timely completion of the project.

(iv) Regular Updates to Buyers: Under RERA, developers are required to provide regular updates to buyers regarding the progress of the project, including construction status, financial statements, and any changes in the original plans.

(v) Penalties for Non-Compliance: The Act imposes strict penalties and fines on developers for non-compliance with its provisions. This serves as a deterrent against fraudulent practices and delays in project completion.


Impact of RERA on the Real Estate Industry:-

The implementation of RERA has had a profound impact on the Indian real estate industry. Let’s take a look at some of the key changes brought about by this revolutionary legislation:

(i) Increased Transparency: RERA has brought much-needed transparency to the real estate sector. The mandatory disclosure of project details, along with regular updates to buyers, ensures that there are no hidden surprises for homebuyers.

(ii) Protection of Homebuyers’ Rights: RERA empowers homebuyers by providing them with a platform to voice their concerns and seek redressal for any grievances. The establishment of a regulatory authority ensures that their rights are protected and any disputes are resolved promptly.

(iii) Professionalism in the Sector: The Act has introduced a higher level of professionalism in the real estate sector. Developers are now required to adhere to strict guidelines and best practices, leading to improved quality of construction and timely delivery of projects.

(iv) Stimulated Demand: RERA has instilled confidence among homebuyers, resulting in increased demand for real estate properties. With the assurance of transparency and timely completion, more people are willing to invest in the real estate market.

(v) Consolidation of the Industry: The stringent provisions of RERA have led to the consolidation of the real estate industry. Small and unreliable developers are finding it difficult to comply with the Act, leading to the emergence of larger, more reliable players.

Consent Letter in Post RERA Era:-

While proponents of the RERA Act are upbeat about its positive prospects for the Industry, homebuyers have a slightly different tale to tell. Recently, an aspiring home buyer (let’s call him ‘Rohan’ for reasons of confidentiality) booked an apartment in an upcoming RERA-registered housing project in Lucknow, Uttar Pradesh being constructed by a reputed ‘branded’ Developer. Confident that the latter would strictly comply with the RERA Act, Rohan made a 10 percent down payment and proceeded to register the Agreement for Sale along with the Developer. Having registered the Agreement at the Office of the Sub-Registrar, Rohan was in for a minor shock when, at the last minute, the Developer asked him to sign a letter titled “Unconditional Consent to Make Alterations in Project Plans”.

By making him sign the letter, the Developer wanted Rohan to consent to any future changes he would make in the sanctioned building plans. Such consent would be unconditional, irrevocable, and tendered in advance, leaving the Developer free to make any changes as per his whims and fancies. Sensing malicious intent on the part of the Developer, Rohan politely but firmly refused, citing Section 14 of the RERA Act in support of his stand. Irritated by Rohan’s response, the Developer became agitated and even tried to pressure him into signing, to no avail.

No Amendment in Plans without Buyer’s Consent – Section 14 of the RERA Act:-

Developers are strictly forbidden by Section 14 of the RERA Act from making any changes to the approved project plans without first obtaining the homebuyers’ consent. Per Section 14, prospective buyers are permitted to make changes to an apartment’s plans and specifications with their prior written consent. However, unless the Developer acquires the prior written consent of two-thirds of the project’s allottees, modifications to the project’s overall layout and the building’s common areas will not be carried out. As a consequence, the Developer is legally required to follow the granted plans across construction and has been forbidden to make a different arrangement.

The legal requirement that prospective homeowners be informed of any proposed changes to the project before offering their consent utilizes the phrase “prior written consent” critically.

Conclusion: A Paradigm Shift in Indian Real Estate

A period of innovation in the Indian real estate industry has been ushered in by the Real Estate Regulation Act of 2016. Both buyers and developers benefit from the increased transparency, accountability, and consumer protection it has brought about. The enactment of RERA brought about a paradigm shift in the world of real estate toward professionalism and trust, establishing the door to a brighter tomorrow.

Aditya Pratap is a lawyer and founder of Aditya Pratap Law Offices. He practices in the realm of real estate, corporate and criminal law. His website is and his media interviews can be accessed at .Views expressed are personal.

This article has been assisted by Nikhil Abhay Singh, a 4th year law student pursuing B.A.L.LB. at the University of  Lucknow.

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