Real Estate (Regulation and Development) Act, 2016: A Comprehensive Overview

The Real Estate (Regulation and Development) Act, 2016 (RERA) is a game changer for the Indian real estate sector to bring in transparency, accountability and efficiency. This post will cover the history, key provisions, impact, implementation challenges and successes of RERA.

History and Background

Genesis of RERA

The journey of RERA started with the need to address the malpractices in the real estate sector. Affordable housing and need for a regulatory framework was discussed during the 2009 conference of National Housing Development and Municipal Administration Ministers. Ministry of Housing and Urban Poverty Alleviation drafted the Real Estate bill which was introduced in Rajya Sabha on August 14, 2013. After significant changes recommended by the Rajya Sabha Committee in December 2015, the bill was passed by Rajya Sabha on March 10, 2016 and by Lok Sabha on March 15, 2016. RERA came into force on May 1, 2016 partially and full implementation on May 1, 2017.

Need for Regulatory Framework

Indian real estate sector was plagued by issues of delays in project delivery, lack of transparency and fraud. RERA was introduced to protect consumer interests, standardize business practices and promote fair transactions in the real estate market.

Key Provisions of the Act

Registration Mandatory

Under RERA, all real estate projects above 500 sqm or more than 8 apartments must be registered with Real Estate Regulatory Authority (RERA). Real estate agents facilitating these transactions also need to register.

Rights and Duties of Promoters and Allottees

Promoters

• Disclosure: Promoters must disclose project details including layout plans, approvals and completion timelines.
• Fund Usage: 70% of the funds collected from buyers must be deposited in a separate bank account and used only for the project’s construction.
• Timely Delivery: Promoters are liable for project delays and must compensate buyers.

Allottees

• Information: Buyers have right to get project information and updates.
• Defect Liability: Promoters must rectify structural defects reported by buyers within 5 years of possession.

Roles and Responsibilities

RERA

RERA regulates and promotes real estate, ensures compliance to the Act and protects consumer interest.

Real Estate Appellate Tribunal

Tribunal hears grievances and appeals against RERA decisions. Resolves disputes quickly.

Penalties and Adjudication

Non compliance to the Act attracts severe penalties, up to 3 years imprisonment for promoters and 1 year for real estate agents and allottees. Financial penalties up to 10% of the project cost.

Impact on Stakeholders

For Homebuyers

• Transparency and Accountability: More transparency and standardisation.
• Timely Completion: Project completion in time, no delays for buyers.
• Consumer Protection: Can report defects in 5 years and get redressal for grievances.

For Real Estate Developers

• Compliance and Accountability: Developers have to comply with strict rules, accountability and quality.
• Financial Discipline: 70% of project funds in a separate account, financial discipline.
• Mandatory Registration: Agents have to register with RERA, so only genuine agents are in the market.
• Operational Changes: Agents have to comply with the Act, changes in operational practices.

Implementation Challenges and Successes

State Level

State governments are responsible for setting up RERA authorities and implementing the Act. While most states have set up the authorities, implementation is not uniform, with challenges like resistance from local governments and funding issues.

Challenges

• Clearance Delays: Getting government clearances is still a big issue.
• Complex Registration: Technology based registration is complex for those who don’t have technical knowledge.

Success Models

Countries like US have implemented strong real estate regulations in states like California and New York. These models show how enforcement and consumer protection is important and can be a benchmark for RERA implementation in India.

Conclusion

The Real Estate (Regulation and Development) Act, 2016 is a game changer for Indian real estate. By promoting transparency, accountability and consumer protection it will create a fair and equal real estate market. Let’s keep working on implementation mechanisms and challenges to make RERA’s impact empowering for all.

FAQs

What is RERA?

RERA is a new law to bring in transparency, accountability and fairness in the real estate industry which was earlier unregulated and had many unfair practices. It’s a balanced law for both developers and consumers by laying down strict rules for property transactions.

How does RERA impact real estate?

RERA is a big step forward in regulating the unregulated real estate sector. It brings in more transparency to property transactions and addresses many long pending issues in the industry.

What does RERA 2016 address in terms of accountability?

RERA 2016 protects homebuyers and brings in fairness, transparency and accountability in real estate. This law is to ensure growth and address the issues which were plaguing the industry for long like false practices and no standard processes.