Real Estate Regulatory Authority – RERA – How RERA Act reformed the real estate sector?

Real Estate Regulatory Authority (RERA)

  • A regulatory body established by each state government by notifying rules under the Real Estate (Regulation and Development) Act 2016, or the RERA Act enacted by the Parliament of India.
  • Aim – to regulate and promote the real estate sector in transparent and accountable manner, in order to protect homebuyers, and boost investments in the sector.
  • Responsibilities:
    • Ensuring disclosures of real estate projects by promoters.
    • Real Estate Projects Registration: No selling or advertising is allowed without the project getting registered with RERA.
    • Real Estate Agents Registration.
    • Complaints redressal.

Real Estate Appellate Tribunal has also been established in each state to hear appeals to decisions of RERA, under the RERA Act 2016.

How the RERA Act brought reform to the real estate sector?

  • Financial discipline
    • 70% of the amount realised for the project from the allottees, shall be deposited in a scheduled bank [Escrow account] and shall be used only for the purpose of the project, not to be diverted into other project.
  • Transparency
    • Details of all registered projects to be available online for citizens.
  • Citizen centricity – empowering homebuyers
    • Citizens can view all project disclosures on RERA website.
    • A promoter cannot make any additions and alterations in the sanctioned plans without the consent of at least two-thirds of the allottees.

RERA regulation will enhance investor confidence and is expected to boost investments in the real estate sector, which is essential to achieve the Housing for All mission, and for infrastructure needs of the country.

More related information:

February 2019: The government has brought an amendment in the Insolvency and Bankruptcy Code (IBC) allowing homebuyers to be treated as financial creditors. This has increased the default risks for developers with delayed projects. The time-bound nature of the insolvency process provides little window for developers to reach a settlement with the aggrieved buyers, failing which the resolution professional takes over the management, said the rating agency ICRA.

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