The RERA report card


  • The Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect (May 1 2017).
  • There is still a long way to go before the real estate sector operates in an “efficient and transparent manner and protect the interest of consumers”, as set forth in the statute’s preamble.

A record of extremes:

  • Only 20 of the 28 States (the Act is not applicable in Jammu and Kashmir) have framed the rules stipulated under RERA to carry out its legal mandate. In some States such as Uttar Pradesh, the Act’s provisions have been watered down in favour of builders by altering the definition of “on-going projects” which need registration under RERA. There is also a dilution on the penalties for non-compliance.
  • Apart from Maharashtra, only Punjab and Madhya Pradesh have appointed a permanent regulatory authority (to be established within a period of a year).
  • 13 States working with only a designated regulatory authority. West Bengal is yet to even designate a regulatory authority.
  • Only six States have set up the online portal contemplated by the Act. In the Northeastern States, RERA has been challenged on certain constitutional grounds — of land belonging to the community and autonomous councils.
  • Notable provisions of the RERA is the requirement to keep 70% of funds received for a project in a separate escrow account, a step to prevent a diversion of funds which usually happens and in turn results in project delays. Perhaps because of this stipulation and the overall ill-health of the real estate sector, many developers are now facing insolvency proceedings under the new Insolvency and Bankruptcy Code (IBC). Most of these pertain to projects which are not registered under RERA. And while the Insolvency Law Committee has proposed to treat home buyers as unsecured financial creditors, the insolvency process has many other complexities which can tie up consumers for much longer than they may have bargained for. There also appears to be a potential conflict developing between the IBC and RERA which needs to be checked as it would be against consumer interests.


  • Maharashtra, which has established both the regulatory authority (Maharashtra Real Estate Regulatory Authority, or MahaRERA) and the appellate tribunal, has shown that with earnest action, the Act and the establishment of the permanent regulator can have a positive impact in reassuring real estate purchasers. MahaRERA’s online portal has led to builders registering projects and a high degree of compliance in terms of registration by real estate agents. This along with fast track adjudication of consumer complaints has made the MahaRERA an example of how other States need to implement the Act.


  • RERA allows State governments to designate an existing body as the regulatory authority until a permanent one is established. 

Value Edition for Mains:

  • The speedy dispute redress mechanism envisaged by the Act is yet to take shape.
  • Besides procedural compliances, implementation of the Act eventually needs to focus on consumer interests. In these efforts, rudimentary compliance must be eliminated and practicality adopted.
  • RERA also provides for the regulation and maintaining of records of real estate projects, the objective being to facilitate the growth and promotion of a “healthy, transparent, efficient and competitive real estate sector”.
  • Given that the Central government is keen to curb black money, a large part of which has its origins in or finds its way into real estate, it needs to ensure that States give full effect to RERA.


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