he Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by

the Indian Parliament. The RERA seeks to protect the interests of home buyers and
also boost investments in the real estate sector. The Rajya Sabha passed the RERA
bill on March 10, 2016, followed by the Lok Sabha on March 15, 2016 and it came
into force from May 1, 2016. 59 of its 92 sections were notified on May 1, 2016 and
the remaining provisions came into force from May 1, 2017. Under the Act, the
central and state governments, are required to notify their own rules under the Act,
six months, on the basis of the model rules framed under the central Act.

Why RERA?
For long, home buyers have complained that real estate transactions were lopsided
and heavily in favour of the developers. RERA and the government’s model code,
aim to create a more equitable and fair transaction between the seller and the buyer
of properties, especially in the primary market. RERA, it is hoped, will make real
estate purchase simpler, by bringing in better accountability and transparency,
provided that states do not dilute the provisions and the spirit of the central act.
The RERA will give the Indian real estate industry its first regulator. The Real Estate
Act makes it mandatory for each state and union territory, to form its own regulator
and frame the rules that will govern the functioning of the regulator.
Establishment of the regulatory authority: The absence of a proper regulator (like
the Securities Exchange Board of India for the capital markets) in the real estate
sector, was long felt. The Act establishes Real Estate Regulatory Authority in each
state and union territory. Its functions include protection of the interests of the
stakeholders, accumulating data at a designated repository and creating a robust
grievance redressal system. To prevent time lags, the authority has been mandated
to dispose applications within a maximum period of 60 days; and the same may be
extended only if a reason is recorded for the delay. Further, the Real Estate
Appellate Authority (REAT) shall be the appropriate forum for appeals.
Compulsory registration: According to the central act, every real estate project
(where the total area to be developed exceeds 500 sq mtrs or more than 8
apartments is proposed to be developed in any phase), must be registered with its
respective state’s RERA. Existing projects where the completion certificate (CC) or
occupancy certificate (OC) has not been issued, are also required to comply with the
registration requirements under the Act. While applying for registration, promoters
are required to provide detailed information on the project e.g. land status, details of
the promoter, approvals, schedule of completion, etc. Only when registration is
completed and other approvals (construction related) are in place, can the project be
marketed.
Reserve account: One of the primary reasons for delay of projects was that funds
collected from one project, would invariably be diverted to fund new, different
projects. To prevent such a diversion, promoters are now required to park 70% of all
project receivables into a separate reserve account. The proceeds of such account
can only be used towards land and construction expenses and will be required to be
certified by a professional.
Continual disclosures by promoters: After the implementation of the Act,
home buyers will be able to monitor the progress of the project on the RERA website
since promoters will be required to make periodic submissions to the regulator
regarding the progress of the project.

Important part
When the Real Estate Regulation Act was implemented on May 1, 2017, it took the sector by
storm. Two years since RERA, it is worth considering how the RERA has shaped the
industry and what industry leaders think of the transformation owing to the strict regulations
and rigorous actions that came with this new Act. Like any new regime, the first two years
were filled with uncertainty. For an industry such as real estate that has been traditionally
unorganised and fragmented, this sort of transformation becomes even more overwhelming.
When asked about how far RERA has been successful in bringing transparency to the sector
and what changes did the industry witness, Nabil Yusuf Patel, Director, Sales & Marketing
and Business Development, DB Realty agreed that it has played a pivotal role in shaping the
realty segment and expressed optimism about its future. Indeed, consumers are very happy
too as they can now resolve their disputes and differences with the developers within the
stipulated time of 60 to 90 days.
The main idea of RERA was to provide additional protection to consumers, safeguarding
their interests and ensuring that the delivery of the ongoing construction is a relatively
seamless process. Today, there is a resounding verdict in favour of it and the general opinion
is that RERA has been successful in achieving the goals for which it was formed. It allows
the end-consumer to see all updates on the property in one platform. Building a strong trust
between the developers and buyers is arguably the most important achievement of RERA.
As a major employment generating industry and with many other auxiliary industries
dependent on it, real estate is looking at a better future as the confidence between the buyers
and developers is improving by the day. Industry leaders including Nabil Patel of DB
Realty also highlight how RERA has brought a sense of formalisation to the sector which
had been burdened by multiple layers of bureaucracy at all stages with respect to the
construction of the building. One should also applaud the real estate companies who have
stood strong to the challenge and the regulators who have been instrumental in ensuring that
the Act is implemented meticulously.
With so many projects having a RERA cover, real estate investment is no longer considered
as a risky proposition. The transparency in the sector is bringing in more consumer interest in
India and among NRIs and HNIs. While a lot has been achieved in the short time, there is still
a big area for improvement. Till date, 22 states and 6 union territories have already notified
their RERA rules. There are still 12 states and Union Territories that need to implement it.
Once this is done, RERA will be successful across India and the realty segment will reach a
new high.

RERA was implemented by Central Govt. last year mainly to protect buyer interest.
Indian Real estate has been in Chaos and disorder for very long time so to make
things correct and in order Govt. bring Real Estate Regulation Act.

Impact of RERA on real estate

1. Lesser option of bankruptcy as builder has to maintain a Escrow Account

containing 70 % of Project Value.
2. Timely Delivery of property otherwise builder has to pay fine and interest
on property.
3. No more change in floor and master plan as builder has to develop
projects as per the passed plan, cannot manipulate as per his choice.
4. All commitment done by builder during agreement must be full fill at the
time of possession. Everything is going to be mentioned in BBA ( Builder
Buyer Agreement).
5. No more escalation or any other hidden charges. All the charges are
going to be mentioned in BBA.
6. In case of delay in possession you can either get full refund with proper
internet or can get the delay interest.
7. Builder can’t start selling without proper documentation done and plan
submitted to designated authority.