INTRODUCTION TO
DETAIL ASPECTS OF “RERA”
Prof. Dighe Bhushan N.
BE Civil, [Link] Town and Country Planning
Assistant Professor, Civil Engineering Department,
Samarth college of Engineering & Management, Belhe.
Overview of Construction
Sector in India
India's construction industry employs a work force of nearly 32 million
and its market size is worth about Rs. 2,48,000 crores. It is the second largest
contributor to the GDP after the agricultural sector. Increase in population is
demanding more space for accommodation, especially in tier 1 cities. To fulfill the
demand, construction activities have been increased by both government bodies
and private sector companies. In India, government is also emphasizing on the
development of rural areas. These are the key factors that have been fueling the
growth of the construction market.
The real estate sector in India has witnessed significant growth in recent
[Link] construction and real estate sector in India is facing significant
challenges, but it also holds immense potential for growth. With strategic policy
interventions, financial reforms, and a focus on innovation, the sector can
overcome the current crisis and achieve sustainable development.
Challenges in the Construction/Real Estate Sector
Before RERA's implementation, the Indian real estate sector faced a multitude of challenges that hindered its growth and negatively
impacted homebuyers. These challenges included delayed project completion, lack of transparency in project details, and
inadequate mechanisms for resolving disputes between builders and buyers.
1 Project Delays 2 Lack of Transparency 3 Dispute Resolution
Many projects were delayed. Developers often failed to provide Effective mechanisms for resolving
complete and accurate information disputes were lacking, leaving
about projects. buyers vulnerable.
4 Misleading Marketing
Developers often engaged in misleading advertising practices to attract buyers.
Introduction to,
Real Estate Regulatory Authority (RERA)
The real estate sector in India has witnessed significant growth in
recent years. However, this growth has been accompanied by several
challenges, including delays in project completion, lack of transparency, and
disputes between builders and buyers. The Real Estate (Regulation and
Development) Act, 2016 (RERA), was introduced to address these
challenges and bring much-needed regulation and transparency to the
sector. RERA seeks to protect home-buyers as well as help boost
investments in the real estate industry. The Act establishes) in each state for
regulation of the real estate sector and also acts as an adjudicating body for
speedy dispute resolution.
1 Pre-RERA Era
The sector faced several challenges, including lack of transparency,
delays in project completion, and disputes between builders and
buyers.
2 Introduction of RERA
The Real Estate (Regulation and Development) Act, 2016, was
introduced to address these challenges.
3 Impact of RERA
RERA has brought about significant changes in the sector, leading
to increased transparency and accountability.
Why RERA?
Regulation Development
RERA sets standards for real It aims to improve the overall
estate projects, developers, quality of real estate
and agents. development.
Consumer Protection
RERA safeguards the rights and interests of homebuyers.
Establishment of Real Estate
Regulatory Authority
State Level
Each state or union territory establishes a Real Estate
Regulatory Authority.
Composition
The Authority comprises members with expertise in real estate,
law, and finance.
Functions
The Authority regulates the real estate sector, addresses
disputes, and protects the interests of buyers.
Functions and Powers of the Regulatory Authority
Registration of Projects Approve or reject project registrations based on compliance with
RERA rules.
Dispute Resolution Adjudicate disputes between promoters, buyers, and other
stakeholders.
Monitoring Compliance Conduct regular audits and inspections to ensure promoters
comply with RERA regulations.
Imposing Penalties Impose penalties on promoters for non-compliance, including
fines and imprisonment.
Objectives of RERA
RERA was enacted to address several issues in the real estate sector and
achieve various objectives.
1 Transparency 2 Accountability
RERA aims to bring It holds developers accountable
transparency to the real estate for their actions and ensures
market by requiring developers timely completion of projects.
to provide detailed information
about their projects.
3 Consumer Protection 4 Market Development
RERA empowers homebuyers It aims to promote the growth
by providing them with a legal of the real estate sector by
framework to address their creating a more stable and
grievances. predictable market.
Key Features of RERA
RERA has various key features that distinguish it from previous regulations.
Real Estate Regulatory Registration of Projects Consumer Grievances
Authority (RERA) Redressal
All real estate projects must be
Each state or union territory has a registered with RERA before they can RERA provides a mechanism for
dedicated RERA to oversee the be launched. homebuyers to resolve their
implementation of the law. grievances with developers.
Scope and Applicability of RERA
RERA applies to various real estate projects and activities.
1 Residential Projects
RERA covers all residential projects, including apartments, villas, and plots.
2 Commercial Projects
Commercial projects like office buildings, malls, and retail spaces are also
included.
3 Real Estate Agents
RERA regulates the activities of real estate agents, requiring them to register
and adhere to ethical practices.
4 Real Estate Projects
The scope of RERA extends to various real estate projects, including under-
construction and completed projects.
Roles and Responsibilities under
RERA
RERA outlines various roles and responsibilities for different stakeholders.
Homebuyer File complaints, access project
information, and obtain timely
possession.
Developer Register projects, fulfill obligations,
and address grievances.
Real Estate Agent Register with RERA, operate
ethically, and comply with
regulations.
RERA Authority Oversee implementation, resolve
disputes, and enforce regulations.
Registration of Real Estate Projects
Project Details 1
Submit plans, layouts, approvals, and other relevant
documents.
2 Application Review
The RERA Authority reviews the application and may ask
for clarifications or additional documents.
Registration Grant 3
Upon approval, the RERA Authority issues a registration
certificate to the project.
Benefits of RERA for Homebuyers
RERA has brought numerous benefits for homebuyers in India, including greater
transparency, protection from unfair practices, and a robust redressal mechanism for
resolving disputes with developers.
Protection from Fraud Financial Security
RERA protects homebuyers from fraudulent RERA ensures that homebuyers'
developers and misleading marketing. investments are protected through escrow
accounts.
On-Time Delivery Fair Dispute Resolution
RERA encourages on-time project RERA provides a fair and transparent
completion and reduces delays. mechanism for resolving disputes between
buyers and builders.
Rights and Duties of Allottees
Right to Information Right to Refund
Buyers have the right to access In case of project delays or
detailed project information, non-compliance, buyers are
including plans, approvals, and entitled to a refund with
financial details. interest.
Right to Grievances Duty to Pay
Buyers can file complaints with Allottees are required to pay
the RERA Authority for any the agreed-upon price as per
grievances related to the the terms of the agreement.
project.
Obligations of Promoters
Project Completion Financial Transparency Disclosing Information
• Complete the project as per • Maintain separate bank • Provide buyers with detailed
the approved plans and accounts for each project. information about the project.
timelines. • Regularly update the RERA • Disclose any liabilities
• Ensure timely completion of all website on project progress associated with the project.
construction activities. and financial status.
Benefits of RERA for
Real Estate
Contractors
The Real Estate Regulatory Authority (RERA) has brought significant
changes to the real estate sector in India. These changes have brought
about numerous benefits for real estate contractors.
Increased Transparency
Clearer Information Reduced Information Asymmetry
RERA mandates contractors to provide detailed information By providing more information, RERA reduces the
about their projects, including plans, approvals, and information asymmetry between contractors and buyers.
financial details. This ensures that all stakeholders have This helps buyers make informed decisions and avoid
access to accurate and reliable information. potential scams.
Timely Project Completion
Project Completion Deadlines Improved Project Management
RERA sets strict deadlines for project completion, encouraging To avoid penalties, contractors have to improve their project
contractors to stick to their timelines. management practices and ensure efficient resource allocation.
1 2 3
Penalty for Delays
Contractors face penalties for failing to meet deadlines, creating a
strong incentive for timely project completion.
Improved Financial
Discipline
1 Accountability and 2 Reduced Risk of Fraud
Transparency
The increased
RERA mandates
transparency and
contractors to maintain
accountability discourage
transparent financial
fraudulent practices and
records and submit regular
ensure that funds are used
reports to the authority.
for their intended purpose.
3 Better Project Planning
RERA's focus on financial discipline encourages contractors to
develop more detailed and realistic project budgets.
Improved Access to Project
Financing
Enhanced Trust
RERA's regulations instill confidence among financial
institutions by providing a framework for transparency and
accountability.
Reduced Risk
The regulations mitigate risks associated with real estate
projects, making them more attractive to lenders.
Easier Access to Loans
The combination of trust and reduced risk makes it easier for
contractors to secure loans for their projects.
Reduced Risk of Delays and
Cost Overruns
Efficient Project Planning Improved Project
Management
RERA's emphasis on Contractors have to adopt
transparency and deadlines better project management
encourages contractors to plan practices to ensure that
projects efficiently and avoid projects stay on track and
unnecessary delays. within budget.
Reduced Uncertainty
RERA's regulations provide a clear framework for project execution,
reducing uncertainty and the likelihood of cost overruns.
Streamlined Approval
Process
RERA's focus on standardized Makes approvals faster and
processes more efficient
Reduced embarrassments by Provides a clearer path for
authorities project approvals
Increased Transparency Reduces the risk of delays due
to clear regulations
Enhanced Brand Reputation
Increased Trust Positive Brand Image
Compliance with RERA regulations helps build trust among RERA-compliant contractors are seen as reliable and
customers and stakeholders. responsible, enhancing their brand reputation.
Opportunities for Collaboration
and Joint Ventures
1 Increased Trust and 2 Sharing of Resources and
Collaboration Expertise
RERA's focus on transparency Collaboration allows
and accountability encourages contractors to share
collaboration and joint resources, expertise, and best
ventures among contractors. practices, leading to improved
efficiency and project
outcomes.
3 Access to New Opportunities
Joint ventures can provide access to new markets, projects, and
funding opportunities.
Overview of some Bye Laws from RERA
1. RERA Registration - RERA makes it mandatory for every builder to get his project registered in RERA if the land on he is
developing the project to exceed 500 square meters or more than eight units. As per section 3, no builder can do a sale or
advertisement without getting his project registered in RERA.
2. Separate account- As per section 4(2)(I)D), every promoter is required to open RERA separate account in a scheduled bank to
cover the cost of construction and land cost of the project. Every builder has to open a separate account in which he has to deposit
70 percent of the amount collected from allottees. Withdrawal from this account can be done after submission of the certificate of
CA, architect, and engineer.
3. Disclosure of carpet area -Now as per the RERA, every builder needs to disclose the carpet area of the inventory for sale in
brochures and agreement to sale. Carpet area has been defined in section 2(g) as “carpet area is defined as 'the net usable floor
area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah
area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment'”.
Overview of some Bye Laws from RERA
4. Defect Liability-Section 14(3) of the RERA Act, 2016 provides the remedy to the allottees in case of any structural defects incurred in
the five years from the date of giving the possession then the promoter is liable to rectify the defect at his own cost. Further, in the event
of promoter’s failure to rectify such defects within 30 days, the aggrieved allottee is entitled to receive appropriate compensation which is
to be decided by the concerned state RERA Authority
5. Standard Agreement to sale - RERA has given the specified format of an agreement to sale. So every builder will be using the format
provided by the RERA of the concerned state.
6. Quarterly update on construction - Builders has to do Quarterly update on which they have to update project details including the
number of units sold, approval taken to date, Certificate from professionals. It will help buyers to track online the progress of the project.
Overview of some Bye Laws from RERA
7. Advance agreement to sale - Builder cannot take more than 10% of the total cost of the unit before entering into a written agreement.
8. Complaint filing- If the buyer has any complaint about the builder /agent, he can make a complaint to RERA. The RERA will resolve the
complaint within 60 days.
9. Approval for alteration in the sanctioned plan- If a builder wants to make any changes in plan and common areas of society, then he
has to take the approval of 2/3 allottees.
10. Agent Registration - Every agent /property dealer is required to get registered in RERA.
Grievance Redressal Mechanism
under RERA
RERA provides a mechanism for homebuyers to file complaints and resolve disputes
with developers.
Complaint Filing Conciliation and Mediation
Homebuyers can file complaints with RERA aims to resolve disputes through
RERA if they have grievances against conciliation and mediation before
developers. resorting to legal proceedings.
Adjudication Appeals
In cases where conciliation fails, RERA Parties can appeal against RERA orders
has the authority to adjudicate and pass to the Appellate Tribunal.
orders.
Penalties and Punishments
under RERA
RERA imposes penalties and punishments on developers who violate its
regulations.
1 Financial Penalties 2 Imprisonment
Developers may face In some cases, developers
financial penalties for non- may be subject to
compliance with RERA imprisonment for serious
regulations. violations.
3 Suspension or Cancellation of Registration
RERA has the authority to suspend or cancel the registration of
projects that fail to comply with its regulations.
Offenses, Penalties, and Compensation
1 False Information 2 Non-compliance 3 Compensation to Buyers
Providing false or misleading Failing to comply with RERA In case of project delays or non-
information to the RERA regulations can result in compliance, promoters may be
Authority is an offense. penalties, including fines and required to pay compensation to
imprisonment. buyers.
Challenges in Implementing RERA
Despite the benefits, the implementation of RERA has faced several challenges, including resistance from some developers, lack of awareness among
homebuyers, and complexities in the regulatory framework.
1 Developer Resistance 2 Lack of Awareness 3 Complexity of the Framework
Some developers have resisted RERA's Many homebuyers are not fully aware of The regulatory framework under RERA is
regulations due to concerns about their rights and the provisions of RERA. complex and requires clarification on
increased compliance costs. certain aspects.
4 Enforcement Issues
The effective implementation and enforcement of RERA's regulations remain a challenge.
Conclusion: The Way Forward for RERA
RERA has been a significant step towards bringing greater transparency and accountability to the Indian real estate sector. However, challenges remain in its
implementation. The way forward requires continued efforts to raise awareness among homebuyers, ensure effective enforcement of RERA's regulations,
and address the complexities of the regulatory framework.
Increased Transparency Collaboration
RERA has brought about a significant increase in transparency in the real Collaboration between the government, developers, and homebuyers is
estate sector. crucial for the successful implementation of RERA.
About official Government Website - [Link]
THANK YOU…
