10 Things Every Home Buyer Must Know About RERA

Real estate[1] is the second largest employer after agriculture – and the housing sector alone contributes ~5-6%[2] to India’s GDP. But it is perceived to be the most corrupt sector of the Indian economy[3] [4] – largely because of its unorganized and unregulated status, with no proper guidelines or proper redressal mechanism.

The recently passed Real Estate Bill[5] provides the much-needed transparency and accountability to the realty sector. If you’re a prospective homebuyer, here are 9 things you absolutely must know about RERA.

  1. A Dedicated Govt. Body for Fact-Checking & Redressals
    The Act mandates setting up of state-level Real Estate Regulatory Authorities (RERAs) and tribunals in every state[6] and Union Territory of India to enable you to:

    1. Easily check your builder’s credentials and project details before you buy
    2. Obtain dispute resolution within 60 days of your filing a complaint
  2. All Developers Must Register with RERA – by Law
    The Act makes it mandatory for every residential and commercial developer[7] to:

    1. register their project with RERA
    2. upload all project details to RERA’s website (for all to view)

The Act applies to:

  1. Residential Projects of at least 500-plus square metres or 8 apartments – as well as under-construction residential projects
  2. Commercial Projects including shops, offices and buildings
  1. Warranties by Project Promotor
    Earlier, unscrupulous promotors would often sell their projects before obtaining the necessary permissions. And to lure buyers, they would offer massive discounts with misleading pre-launch offers. Buyers often fell prey to such offers because they did not bother to check the legal sanctity of the project – i.e. whether the builder had the necessary approvals and permissions in place. This often led to delays, price escalations, carpet area reduction, last-minute change of plans, etc.

To prevent consumers from facing such problems again, the Act now mandates promotors to (among other things):

  1. obtain all the necessary approvals and clearances before selling their property
    (instead of certain specific approvals as was the case earlier)
  2. declare they have legal title to the project land
    (or authenticate the validity of the title if the land is owned by someone else)
  1. Assured Timely Delivery
    Developers would often divert their funds to another project. This led to delays, and in the absence of a regulatory body like RERA, buyers had to bear the brunt of paying additional interest on their loans – often with no compensation from the developer.Developers will no longer be able to short-change buyers. The Act now mandates that 70% of a buyer’s payment must be kept aside in a separate bank account. And the money from this account can be used only towards the construction of the project. And if they fail to deliver on time, you can legally claim a refund with interest.

  2. Developers Must Furnish Accurate Project Details
    The Act makes it mandatory for a developer to disclose all relevant information about their project on their website, and for RERA to disclose it on their website – such as:

    1. project plan and site layout
    2. number and types of homes for sale
    3. government approvals
    4. land title status
    5. details of intermediaries
    6. names of sub-contractors
    7. schedule for completion (incl. deadlines)
    8. payment schedules
    9. quarterly project updates

This (transparency) will ensure your developer does not withhold any important information from you that can leave you in the lurch later.

  1. Developers Must Specify Exact Carpet Area
    Developers will now have to quote their price based on carpet area exactly as defined under the Act, instead of an “ambiguous” super built-up area (like many of them did earlier). Unlike super built-up area, carpet area is the area within the walls of a unit or flat, and it:

    1. includes the area covered by internal partition walls
    2. does not include external walls, areas under service shafts, or common areas like balconies, verandas, terraces, etc.

Now you will know exactly how much area you’ll be paying for – with no room for doubt.

  1. Developers Must Share Regular Progress Reports
    Your developer will now have to keep both you and RERA updated with your project’s current status on regular basis.Also, your developer cannot arbitrarily change your project’s layout or building plan after selling it to you (often the case earlier) – unless two-thirds of the buyers of your project agree to the changes.
  2. Developers Will Have to Pay Interest on Delays
    In the pre-RERA days, unscrupulous developers would often divert their funds to other projects and delay their existing projects by years – and still get away without having to pay any interest to the buyer.The Act now provides that in case of any delay, the developer will have to pay you the same interest as the interest you will have to pay to your bank on your EMI.
  3. Violators Can be Jailed and Fined
    Developers will think twice before violating an order of the appellate tribunal of RERA. Because if they do, they can:

    1. be jailed for up to 3 years
    2. fined up to 10% of the project cost
    3. have their registration cancelled

This provision of the Act will prevent unscrupulous developers from short-changing you and getting away with it. It will also ensure your project is executed and delivered without any glitches – as promised.

  1. Mandatory After-Sales Service

If you notice any structural deficiency within one year of taking possession of your flat, you are legally entitled to contact your developer (in writing) and demand after-sales service.

If your developer reneges on their after-sales commitment, you can complain to your state RERA for redress – and expect a speedy resolution within 60 days.

Harsh Modi works as Director at Eden Group, a Kolkata based real estate company. A strong supporter of the Real Estate Regulatory Act, Harsh believes that it will go a long away to revitalize consumer confidence in India’s real estate market.


[1] Real Estate comprises four sub-sectors: Housing, Retail, Hospitality & Commercial

[2] Real Estate Industry in India – India Brand Equity Foundation (IBEF, a government trust

[3] Business Standard (Jan 15, 2015)

[4] FICCI-Ernst & Young Report on Bribery & Corruption in India (2013)

[5] RERA (Real Estate Regulatory Authority) is a statutory body created by an Act of Parliament[5] to protect homebuyers and boost real estate investments in India. The bill was passed by the Upper House (Rajya Sabha) on 10th March 2016 and by the Lok Sabha on 15th March 2016.

[6] except Jammu & Kashmir

[7] Brokers are included under the Act

Posted in Eden
2 comments on “10 Things Every Home Buyer Must Know About RERA
  1. Arkaprovo Chakrabarty says:

    BEST PRICE: 1411 sqft 2 BHK Flat for Sale (incl. party terrace + AC): https://www.olx.in/item/best-price-1411-sqft-2-bhk-flat-for-sale-incl-party-terrace-ac-ID1biVaB.html

  2. RAJIB BHOWAL says:

    Has EDEN group registered under RERA ? If yes, are all projects listed in the portal?

    Many projects do not carry completion certificates, still EDEN brags about customer satisfaction.

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