Learn how the RERA Act of 2016 changed the landscape of Real Estate in India, creating transparency and accountability, initiating trust among homebuyers and developers.

Understanding RERA: The One Act that Forever changed Real Estate in India

Can you remember back to a time when buying a home in India felt like walking in a maze with no sense of direction? Project delays were the norm, critical information was often hidden, and homebuyers were mostly helpless when it came to bad developers. The market needed change, and the Real Estate (Regulation and Development) Act, 2016 (RERA) made that change happen. RERA does not just change the rules; it rewrote the rules that govern the Indian real estate sector for the first time in history leading to a level of transparency and accountability that was unheard of before that.

Before RERA: A Disordered Market

Prior to the enactment of the RERA Act in 2016, the real estate industry was generally unregulated. This left buyers vulnerable to a wide range of risks, from projects that were constantly delayed, to developers making unexpected changes to the plans without consent. Without a multi-state authority, grievance redressal was a especially arduous process. There was an obvious need for regulations that would protect the weakest party: homebuyers.

RERA has become the guardian we were missing.

RERA is the guardian homebuyers need. It has a very simple and yet deep intended focus: Establishing a regulated system as uniform as possible across India, so that developers and homebuyers operate with clear rules and obligations. The Act also established Real Estate Regulatory Authorities (RERA) in each state, providing the sector and disputes a single authority to report and seek resolutions.

A New Era of Transparency and Accountability

Perhaps the most impactful change that has come as a result of RERA is the change that transparency can have. Developers now have to register all commercial and residential projects (over 500 square meters or more than eight units) with the specific state RERA authority. The developers were then required to publicly disclose important information pertaining to the project: plan, layout, governmental approvals, timelines for completion, etc. This is important information and gives prospective buyers a wealth of information to make informed decisions. No longer are there buried clauses or last-minute surprises.

Financial Discipline and Project Security

Then RERA pushed discipline financially. Developers must now deposit 70% of the money they received from home buyers into a separate escrow account. This is serious business because it ensures that funds from buyers are only used for the project they are for; you can't just take them and use them for something else! This is a very good way to reduce money diversion and, for buyers, it drastically reduces the chance of a developer abandoning a project.

Empowering the Homebuyer

For the homebuyer, RERA has been a shining light of hope. It has empowered them with more rights and put them in complete control of the timely possession of their properties. It also provided many new avenues of compensation in the event of late delivery or property defects. RERA has ensured that most developers will be responsible for the entire structural quality of any project for five years after possession, which is very reassuring.

Final Thought

RERA is not merely a law; that it denotes a revolution in the culture of Indian real estate. RERA has professionalized the industry, allowing ethical and sincere developers to be rewarded while preventing worse developers from ruining things for everyone else. For homebuyers, this means that the nerve-wracking experience of buying a property has evolved from being totally petrified about the process toward a feeling of security and confidence. It will take time to make it a bullet-proof system for consumers, however, RERA is already making significant strides toward a trusted and fair real estate trade. Going forward, buying a house should be in reality, the exciting journey toward home ownership instead of a gamble.