Jan 31, 2025

RERA Act: Key Benefits & Rules Every Homebuyer Must Know

The Indian real estate sector has witnessed rapid growth in recent years, but it has also faced challenges like project delays, fraud, and lack of transparency. To protect homebuyers and bring accountability to the industry, the Real Estate (Regulation and Development) Act, 2016 (RERA Act) was introduced.

This blog will help you understand what the RERA Act is, its benefits, key rules, and how it safeguards homebuyers. If you’re planning to buy a home or invest in real estate, knowing about RERA can help you make an informed decision.

What is the RERA Act?

The Real Estate (Regulation and Development) Act (RERA) was passed in 2016 and implemented on May 1, 2017. The primary objective of this law is to bring transparency, accountability, and efficiency to the real estate sector.

Objectives of the RERA Act

  • Protect homebuyers from fraud and project delays.
  • Ensure timely completion of real estate projects.
  • Regulate builders and developers to improve credibility.
  • Reduce disputes between buyers and developers.
  • Increase transparency in real estate transactions.

Under RERA, each Indian state has established a Real Estate Regulatory Authority (RERA) to oversee and regulate the sector. All builders and developers must register their projects under RERA before advertising or selling them.

Key Features of the RERA Act

The RERA Act introduced several reforms to make the real estate sector more reliable for homebuyers. Some of its most important provisions include:

1. Mandatory Registration of Projects

All residential and commercial projects above 500 sq. meters or with more than 8 apartments must be registered under RERA before being sold.

2. Standardization of Carpet Area

Builders often mislead buyers by inflating property sizes. RERA mandates a standardized definition of carpet area, ensuring homebuyers only pay for the actual usable space.

3. Protection Against Project Delays

Developers must specify the project completion date during registration. If they fail to meet the deadline, buyers can claim a full refund with interest or compensation.

4. Escrow Account for Funds

To prevent the misuse of funds, 70% of the money collected from buyers must be deposited in an escrow account and used only for construction and land costs.

5. Liability for Defects in Construction

If structural defects appear within 5 years of possession, the builder must fix them at no extra cost.

6. Advance Payment Restriction

Builders cannot ask buyers to pay more than 10% of the property’s cost as an advance before signing a sale agreement.

7. Right to Full Refund

If the builder fails to complete the project or violates RERA rules, buyers can request a 100% refund with interest.

8. Fast-Track Complaint Resolution

RERA ensures faster dispute resolution through the Real Estate Appellate Tribunal, which resolves cases within 60 days.

Benefits of the RERA Act for Homebuyers

1. Transparency & Accountability

Before RERA, many developers engaged in unfair practices like hidden charges and misleading advertisements. Now, all project details are available on state RERA websites, ensuring transparency.

2. Protection Against Fraud

Builders must provide accurate information about the project, including layout, completion timeline, and price. Any deviations can lead to legal action.

3. Ensured Timely Possession

With strict regulations and penalties, developers are now more likely to complete projects on time, benefiting homebuyers.

4. Clear Legal Recourse

If a builder fails to meet their commitments, buyers can file complaints with RERA authorities and get a fair resolution within 60 days.

5. Financial Security

The requirement to deposit 70% of project funds in an escrow account prevents builders from diverting money to other projects, ensuring financial security for homebuyers.

RERA Act Rules & Regulations for Builders and Developers

While the RERA Act provides several benefits to homebuyers, it also places strict guidelines on developers, including:

  • Mandatory registration of all projects above 500 sq. meters or 8 apartments.
  • Accurate project disclosures on the RERA portal.
  • No misleading advertisements or false promises.
  • Completion deadline adherence with penalties for delays.
  • 5-year liability for construction defects.

Failure to comply with these regulations can result in heavy fines or imprisonment for developers.

How to Check if a Project is RERA-Registered?

To verify if a project is registered under RERA, follow these steps:

  • Visit your state’s RERA website. For example, if your state is Gujarat then visit the RERA Gujarat website.
  • Enter the project name or developer name in the search bar.
  • Check the registration details, approvals, and project status.
  • Verify the possession date, project layout, and financial disclosures.

How to File a Complaint Under RERA?

If you face issues with a builder, you can file a complaint under RERA by:

  • Visiting the state RERA website and selecting the complaint section.
  • Filling out the online complaint form with project details and issues.
  • Paying the required fee and submitting the form.
  • Awaiting resolution, typically within 60 days.

If unsatisfied, you can escalate the issue to the Real Estate Appellate Tribunal.

Impact of the RERA Act on the Indian Real Estate Market

The implementation of RERA has significantly improved the real estate sector’s credibility and brought buyer confidence back. Some key impacts include:

  • Increased buyer trust, leading to higher real estate investments.
  • More disciplined builders, resulting in fewer project delays.
  • Better financial management, as funds cannot be misused.
  • Legal clarity and faster dispute resolution, make the home-buying process smoother.

Conclusion

The RERA Act has transformed India’s real estate industry, ensuring transparency, accountability, and protection for homebuyers. If you are planning to invest in property, always check for RERA registration to safeguard your investment.

With RERA in place, buying a home has become safer, more reliable, and hassle-free. Whether you're a first-time homebuyer or a seasoned investor, knowing your rights under RERA can help you make an informed decision and avoid potential risks.