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The What, Why, And How of RERA
by Admin December 7, 2023

The What, Why, And How of RERA

Real estate in India has an unregulated past. Back in the day, no real safeguards existed. Project delays, process irregularities, and user agony were par for the course.

What did that mean?

Developers and builders ruled the game. Different projects entailed different practices and standards, leaving investors and end-users in the lurch.

Not anymore!

The Government of India came up with the Real Estate Regulatory Authority Act (RERA), a landmark real estate regulation towards a structured industry.

The RERA Act

RERA was enacted in 2016 to give voice to investors and buyers while setting accountability on developers. One of the most significant changes introduced is the mechanism to settle disputes in line with the act's provisions.

RERA mandates projects exceeding 500 square meters or eight flats to be registered with their respective state RERA.

A project's RERA status (RERA number) is an actionable signal investors rely on to make investment decisions. If the project is not listed, it may not align with the act's guidelines and best stayed off.

RERA Advantages

RERA introduced a new regulatory environment benefitting real estate investors, end-users, and sellers. Some of the salient features are-

  • Defining a standard carpet area- The plot's carpet area defines the property's value. However, before RERA, the definition of carpet area wasn't available, leading to no defined formula for calculating the property price. RERA gave a standard formula, meaning builders cannot use larger carpet areas to increase prices.

  • Advance Payments- As per RERA, sellers cannot charge more than 10% of the project cost as advance or application fees, saving buyers from having to source quick funds.

  • Buyer's Rights- If there is any structural damage or problem with the quality within five years of possession, the builder has to rectify it within 30 days without any extra cost.

  • Interest in case of delay: Before RERA, the interest paid by the seller on project delays was much lower than the interest paid by the buyer on defaulting. Today, defaulting parties pay the same interest percentage.

  • Right to Information- Buyers have all the right to know everything about the project, including the layouts, execution, and completion status. The same is available on the RERA website.

Impact of the RERA Act

RERA is a game-changer with a wide-ranging impact:

  • RERA mandates the builder to rectify any property damage within the first five years of possession at no extra cost. This ensures that builders focus on the quality of construction.

  • Trust marketing has become a reality as unregistered agents cannot advertise, market, or sell real estate. Every advertisement that goes public must have the RERA number visible.

  • Most project delays happen due to funds shortages. Under RERA, promoters must maintain a separate account where at least 70% of the funds raised through buyers are deposited to minimise the shortage of funds, increasing timely project delivery.

  • Sellers and agents found making wrongful claims, or misadvising are liable to a penalty extending up to 5% of the project cost.

  • Real estate brokers and agents must have a RERA registration number. This step organises the scattered and unregulated broker business.

  • Under RERA, making changes to a project post-commissioning mandates layers of approvals and certifications. Most developers avoid that, ensuring investors get what is promised at the get-go.

Some Notable Judgements After the RERA Act

  1. A case of 'Force Majeure' (circumstances that prevent someone from fulfilling a contract) (2013) was dealt with in a consumer forum under the RERA Act provision, stating that the clause cannot be claimed unless some part of the agreement has already been fulfilled. The court noted that the investor must be refunded with the interest they paid.

  2. In 2019, a case was judged under the RERA Act where the builder had to reimburse the investors monetarily with interest. It was alleged that the builder had failed to hand over possession in the promised time frame and had yet to request an extension.

  3. A 2017 case was ruled in favour of builders and promoters, where the allottees paid a 10% interest on transactional value to compensate the builder for delaying the property's occupancy. RERA Act aims to protect investors first but also provides security to builders and brokers.

  4. In March 2019, MahaRERA fined a builder for not complying with the RERA guidelines to register the property. The appellants said the project had an area of less than 500 sq. mts, but apartments had more than eight floors. RERA ruled that the interpretation of clauses regarding conditions to be fulfilled must be read in its most accurate form.

  5. In the latest ruling of 2022, a woman in Gurugram got her amount refunded with an additional 9% interest by the Consumer Protection Act and the RERA Act. The Apex court declared that both acts do not contradict one another and must be read harmoniously to an ordinary person, wherever applicable.


RERA is a game changer for India's real estate landscape. RERA addressed major industry issues by bringing transparency, standardising, and promising equal rights to all parties.

Its impact can be measured by a steep reduction in project delays, increased developer accountability, and improved real estate deliveries.

The act unfolds a new era of investor confidence while securing all stakeholders in a project. It could be said that RERA was the missing link to real estate becoming transparent and organised.

If you are looking forward to profitable real estate investments, always trust a RERA-registered real estate consultant like us. Our product portfolio includes some of the best commercial and residential properties in Noida, Lucknow, Pune, Mumbai,  Agra, and Delhi NCR.

Get in touch today to get your best deal with us.


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