Understanding the Real Estate (Regulation and Development) Act, 2016 (RERA Act)

Unlock the mysteries of #RERAAct! Discover its impact on the real estate industry and gain insights with our comprehensive guide. #RealEstateRegulations #RERACompliance

Understanding the Real Estate (Regulation and Development) Act, 2016 (RERA Act)
Understanding the Real Estate (Regulation and Development) Act, 2016 (RERA Act)

In this comprehensive guide, we will delve into the intricacies of the Real Estate (Regulation and Development) Act, 2016, commonly known as the RERA Act. We, as experts in the field of real estate and finance, aim to provide you with valuable insights that can help you gain a profound understanding of the RERA Act and its implications.

The Real Estate (Regulation and Development) Act, 2016, is a landmark legislation passed by the Indian Parliament to bring about transparency and accountability in the real estate sector. Prior to the enactment of the RERA Act, the real estate industry in India faced several challenges, including delays in project deliveries, unfair practices by developers, and lack of transparency, which often led to a trust deficit between developers and homebuyers.

The RERA Act sought to address these issues by establishing a regulatory framework that protects the interests of homebuyers while ensuring that developers adhere to the highest standards of professionalism and ethics.

Key Provisions of the RERA Act

  1. Mandatory Registration of Projects: One of the primary objectives of the RERA Act is to ensure that all real estate projects, both residential and commercial, are registered with the respective state's Real Estate Regulatory Authority (RERA) before they are advertised, marketed, or sold. This registration process brings transparency to the market by providing essential information about the project to potential buyers.
  2. Deposit of Funds in Escrow Account: To protect the interests of homebuyers and prevent developers from diverting funds to other projects, the RERA Act mandates that developers must deposit 70% of the funds collected from buyers into a dedicated escrow account. This measure ensures that the funds are utilized only for the specific project's development.
  3. Clearance and Approvals: Prior to the commencement of the project, developers must obtain all necessary clearances and approvals from relevant authorities, including building permits, environmental clearances, and other statutory permissions. This provision reduces the risk of delays due to regulatory issues.
  4. Adherence to Carpet Area: In the past, homebuyers often faced confusion regarding the actual area they were purchasing, as developers used to advertise properties based on the super built-up area, which included common spaces. The RERA Act has rectified this by mandating that properties be sold based on the carpet area, which is the usable floor area within the walls. This ensures greater transparency and enables buyers to make more informed decisions.
  5. Standardized Agreements: The RERA Act prescribes the use of a standardized sale agreement, which includes all the terms and conditions of the transaction. This measure makes the agreement more comprehensible and reduces the scope for unfair practices.
  6. Five-year Structural Warranty: The Act requires developers to provide a structural warranty for a period of five years from the date of possession. This warranty ensures that any construction defects that may arise after possession are addressed by the developer, giving homebuyers peace of mind.

Impact of RERA Act on Homebuyers

The RERA Act has had a profound impact on homebuyers in India. It has significantly increased consumer confidence in the real estate market, as homebuyers now have access to more information and protection against unfair practices. With mandatory project registration and deposit of funds in escrow accounts, the risk of project delays and financial mismanagement has been minimized.

The provision of selling properties based on carpet area has also brought in greater clarity and transparency in transactions. Homebuyers can now make more informed decisions based on the actual usable area of the property, without any ambiguity.

Furthermore, the standardized agreements and the five-year structural warranty have given homebuyers the assurance that they are dealing with credible developers who are accountable for the quality of their projects.

Impact of RERA Act on Developers

While the RERA Act has imposed stricter regulations on developers, it has also brought about positive changes in the industry. Developers are now required to adhere to timelines and deliver projects on schedule, which has led to better project management and execution.

By depositing funds in escrow accounts, developers are now incentivized to use the funds for the designated project, thus reducing the risk of diversion and financial mismanagement. This has helped in boosting the confidence of potential investors in the real estate market.

Moreover, the RERA Act has encouraged developers to adopt more professional practices, leading to an improvement in the overall reputation of the real estate industry. With greater transparency and accountability, developers who comply with the RERA Act's provisions are perceived as more trustworthy and reliable by potential homebuyers.


In conclusion, the Real Estate (Regulation and Development) Act, 2016, has been a transformative legislation for the Indian real estate sector. By promoting transparency, accountability, and consumer protection, the Act has set a new standard for the industry. Homebuyers now have greater confidence in the real estate market, and developers are encouraged to adopt ethical practices.

Understanding the RERA Act is essential for all stakeholders involved in the real estate sector, including homebuyers, developers, investors, and real estate professionals. By staying informed about the Act's provisions and implications, one can make better-informed decisions and contribute to the growth and stability of the Indian real estate market.

Remember, knowledge is power, and with the knowledge of the RERA Act, you can embark on your real estate journey with confidence and certainty. Let the RERA Act be your guiding light in the pursuit of your dream home or investment property!

Note: The information provided in this article about Real Estate Regulatory Authority  is for informational purposes only. It is not intended as legal or professional advice and readers should consult qualified professionals for advice specific to their circumstances.  

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Explore the list of new RERA-approved projects in your area:-

Assam RERA Haryana RERA Karnataka RERA
Maharashtra RERA Rajasthan RERA Chhattisgarh RERA
Gujarat RERA Madhya Pradesh RERA Punjab RERA