Real Estate Regulatory Authority Act (RERA)


    In News 

    • The Supreme Court in its judgment suggested some changes in the Real Estate Regulatory Authority Act (RERA) to protect the interests of homebuyers. 

    Objectives behind Supreme Court’s judgement  

    • The RERA rules were diluted in many states and being misused by some developers. Many under-construction projects had still not been completed till the RERA implementation didn’t come under its ambit. 
    • Now with the SC verdict, these under-construction projects, too, will come under RERA and thereby benefit homebuyers, in the long run.
    • It aims to protect the interests of a successful party that has obtained a favourable order from the RERA authority. 
    • This law will empower the consumer while boosting the credibility of developers. 
    • The ruling brings a major relief for the buyers, speeds up the resolution process, and makes it difficult for state governments to dilute the intent of the law.

    Supreme Court’s observations 

    • The Supreme Court affirmed that the provisions of RERA are applicable to projects that were ongoing and for whom completion certificates were not obtained at the time of the enactment of the law, in effect interpreting that the law is retroactive.
    • The court also held that the amount invested by the allottees, along with interest as quantified by the regulatory authority or the adjudicating officer, can be recovered as arrears of land revenue from the builders.
    • Developers will now have to provide project details, timelines and the layout plan (which under the current dispensation is rarely shared with the home-buyer). They will need to deposit 70% of the money raised from buyers in an escrow account.
    • There is a provision for revoking registration and imposition of penalties. A big relief that RERA will bring is in respect of advertisements of projects. 
      • The promotional material will have to carry details of the project’s registration as also the website of the regulator.
    • The Supreme Court affirmed that it is mandatory for real estate developers to deposit at least 30% of the penalty ordered by the regulator, or the full amount as the case may be before they challenge any RERA order under Section 43(5). 
      • This is expected to ensure that only genuine appeals are filed and homebuyers’ interests are protected.

    About Real Estate Regulatory Authority Act (RERA)

    • Origin:  
      • Regulation of the real estate sector was under discussion since 2013, and the RERA Act eventually came into being in 2016. 
      • Prior to the law, the real estate and housing sector were largely unregulated, with the consequence that consumers were unable to hold builders and developers accountable. 
      • The RERA came into force on May 1, 2017.
    • The Salient Features of this Act are:
      • It establishes the State Real Estate Regulatory Authority as the government body to be approached for redressal of grievances against any builder.
      • This law vests authority on the real estate regulator to govern both residential and commercial real estate transactions.
      • This law makes it mandatory for developers to post all information on issues such as project plan, layout, government approvals, land title status, sub-contractors to the project, schedule for completion with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.
      • The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with or without a fine.
      • Every project measuring more than 500 square metres or more than eight apartments will have to be registered with the RERA.
    • It brings the entire real estate sector within a regulatory environment, defining the liabilities and liberties of a developer and providing an effective grievance redress mechanism to the buyer.
    • Present Status: 
      • So far, 34 states/Union Territories have notified rules under RERA, while its implementation in Nagaland is under process. 
      • West Bengal has enacted its own legislation  West Bengal Housing Industry Regulation Act, 2017 (HIRA) instead of notifying rules under RERA. Thirty States/UTs have set up Real Estate Regulatory Authorities, and 26 have set up Real Estate Appellate Tribunals, as per the latest data available with the Ministry of Housing and Urban Affairs.
    • It is a step towards reforming the real estate sector in India, encouraging greater transparency, citizen centricity, accountability and financial discipline.
    • Significance: 
      • It was necessary to bring the real estate sector under a regulatory framework as it had got a bad name due to the lapses of a few. 
      • Moreover, the house-buyer did not really have any effective forum to address his complaints, on either construction, quality, delays in delivery or frauds.
      • To address these issues, the Centre began moves to make this unregulated sector conform to certain guidelines in an equitable manner.
      • RERA was introduced with the objective of ensuring greater accountability towards consumers, reducing frauds and delays, and setting up a fast ­track dispute resolution mechanism.


    • The act makes it mandatory for each state and union territory to form its own regulator and frame the rules to govern the functioning of the regulator.
      • Many States are yet to do so. 
    • Till then in most States, promoters will be regulated by the Promoters Registration Act, which mandates registration by promoters. 
      • However, there is little scope of consumer protection here. 
    • Every State will have to notify the Act, set up a regulator and launch an awareness campaign to empower the consumer. 

    Source: IE