For most people, buying a home is a lifelong dream and a major milestone! It involves years of planning, savings and hope. However, in an unregulated real estate market, buyers often face issues like delayed possession, hidden costs and lack of transparency. To protect home buyers and promote fair practices in the real estate sector, the Indian government introduced the Real Estate (Regulation and Development) Act, or RERA, in 2016. However, this too comes with both certain benefits and drawbacks. In this blog, we’ll take a closer look at the RERA Act advantages and disadvantages and its impact on the industry. Continue reading to learn how it shapes the future!
The Real Estate (Regulation and Development) Act, also known as RERA, is a legislation passed by the Indian Government in 2016 to regulate the real estate sector and to protect the interests of homebuyers. It aims to bring transparency, accountability, and efficiency to real estate transactions, especially in the residential housing market. RERA mandates that all real estate projects exceeding a certain size, along with their promoters, must register with the regulatory authority before advertising or selling.
It also requires developers to provide accurate project details, adhere to timelines, and avoid misleading buyers. One of the biggest advantages of RERA Act is that it empowers buyers by ensuring timely possession, financial transparency, and legal recourse in case of disputes. It has played a key role in building trust between developers and homebuyers across India.
Since its implementation in 2016, the RERA Act has brought significant changes to the Indian real estate sector. Designed to protect homebuyers and promote fair practices among developers, the act has reshaped how property transactions are carried out. However, like any major reform, it has its pros and cons. Understanding the RERA advantages and disadvantages is essential for anyone involved in buying, selling or developing property in India.
The RERA Act has played a crucial role in bringing structure, accountability and fairness to the Indian real estate sector. By setting clear rules and enforcing strict regulations, it has significantly improved the home-buying experience for consumers. Below are some of the most notable advantages of RERA that have positively impacted both buyers and developers.
One of the key advantages of rera registered projects is the high level of transparency they offer. Developers are required to provide accurate details about the project, including layout plans, approvals, possession timeline and construction progress. This information must be updated regularly on the state RERA portal, allowing homebuyers to make informed decisions and reducing the chances of fraud or misinformation.
A major benefit under RERA is the mandatory use of escrow accounts by developers. Builders are required to deposit 70% of the funds collected from homebuyers into a dedicated escrow account. This amount can only be used for the construction and land-related expenses of that specific project. This regulation prevents fund diversion, ensures proper utilisation of money and reduces the risk of construction delays.
Before RERA, builders often used different methods to calculate the carpet area, leading to confusion and inflated property prices. RERA introduces a uniform definition of carpet area, which is the net usable floor area of the property. This standardisation helps buyers know exactly what they’re paying for and eliminates misleading practices related to property size.
One of the most appreciated outcomes when discussing RERA Act advantages and disadvantages is the assurance of timely project delivery. RERA holds developers accountable for completing projects within the promised timeline. If they fail to deliver the property by the agreed date, they are liable to pay interest to the buyer for the delay. This has prompted builders to adhere to their schedules and reduced the number of delayed housing projects.
RERA ensures that homebuyers are fairly compensated in case of project delays, false commitments, or structural defects in the property after possession. If the developer fails to meet the promised conditions, the buyer is entitled to a refund or interest for the delay. This provision gives buyers strong legal protection and holds developers accountable for their promises.
With clear regulations, legal safeguards and mandatory disclosure, RERA has restored trust in the real estate market. Buyers now feel more secure knowing there are rules in place to protect their interests. This increased confidence has encouraged more people to invest in real estate, contributing to a healthier and more transparent property market.
RERA doesn’t just regulate developers – it also brings real estate agents under its purview. Agents must now register with the RERA authority and follow a defined code of conduct. This reduces the chances of misinformation or unethical practices and ensures that buyers deal with certified professionals who are accountable for their actions.
RERA advantages have established dedicated authorities and appellate tribunals to handle complaints and disputes related to real estate transactions. This allows buyers to resolve issues more efficiently compared to traditional legal channels. The presence of a time-bound grievance redressal system ensures faster justice and adds another layer of protection for homebuyers.
Under RERA, developers are legally bound to deliver what they advertise. All promised materials, whether online or offline, must reflect accurate project details as registered with the RERA authority. Misleading claims or false advertisements can lead to penalties, ensuring buyers get exactly what was promised during the sale process.
By promoting transparency, accountability and professionalism, RERA has laid the foundation for long-term growth in the real estate sector. With strict regulations and improved buyer confidence, this industry is moving toward more sustainable and ethical practices. This not only benefits the individual stakeholders but also strengthens the overall economy by making real estate a more reliable and investment-friendly market. A complete win-win situation!
While the RERA Act has brought much-needed reforms for the real estate sector, it isn’t without its challenges. Both buyers and developers have faced certain drawbacks in their implementation, especially in the initial years. From increased compliance burdens to inconsistencies across states, the act has its own sets of limitations that impacts its ability to function effectively. Below are some of the key disadvantages of RERA Act that highlight areas that still need to be improved.
One of the most overlooked aspects when discussing the RERA Act advantages and disadvantages is the financial burdens it places on developers. The Act imposes strict documentation, registration, and reporting requirements. While these ensure transparency, they also lead to increased administrative and legal expenses, especially for small and mid-sized builders. Complying with RERA’s mandates, such as regular project updates, audits and maintaining separate bank accounts, can significantly raise costs. These costs are passed on to buyers indirectly, making housing expensive.
The implementation of RERA has led to higher costs for developers due to strict compliance, financial transparency and legal obligations. To recover these expenses, builders raise property prices, especially in metro cities, which makes it less affordable for homebuyers, particularly those from middle-income backgrounds.
Under RERA, developers must obtain all necessary approvals before registering a project. While this promotes transparency, it also leads to longer approval timelines due to bureaucratic procedures. Delays in securing clearances can stall project launches, affecting construction schedules and increasing holding costs for developers. This can ultimately impact project delivery and raise property prices for buyers.
One of the biggest letdowns for many homebuyers is that RERA doesn’t cover older projects. If a project was launched before the act came into effect and already has a completion certificate, it’s completely excluded from RERA’s protections. This leaves many buyers stuck in delayed or poorly managed projects with no legal support under RERA, defeating the purpose of consumer protection for a large section of people.
While RERA is the central law, its implementation is left to individual states, leading to major inconsistencies. Some states have fully functional RERA authorities and websites, while others lag or have diluted the rules. This uneven enforcement creates confusion among buyers and developers, and weakens the act’s overall impact, especially in regions where regulation is minimal or poorly executed.
When RERA aims to bring discipline to the real estate sector, small and local developers often find it difficult to keep up with strict compliance requirements. From legal paperwork to financial disclosures, the process can be overwhelming and expensive. Many small developers either delay their projects or exit the market altogether, reducing competition and limiting housing options in smaller towns and affordable segments.
Despite its strong framework, RERA isn’t foolproof! Developers and agents often find legal loopholes to bypass certain rules, like manipulating project size to avoid registration or using shell companies to shift liabilities. Inconsistent interpretations by state authorities further complicate matters. These gaps reduce the effectiveness of the Act and sometimes leave homebuyers vulnerable, even when they believe they’re protected under RERA.
When talking about the RERA Act advantages and disadvantages, the key challenge is that the enforcement isn’t always consistent or effective. Even when developers violate rules, penalties or actions are often delayed or not enforced at all. Some state authorities lack the proper infrastructure or manpower to monitor every project. This weak implementation weakens the act’s purpose, leaving buyers with few real-time provisions in place.
With stricter regulations and higher compliance costs under RERA, many small and mid-sized developers have either slowed down or exited the market. This has led to a drop in new projects, especially in affordable housing segments. Over time, this reduced supply can drive up demand and prices, making it even harder for average homebuyers to find suitable and budget-friendly properties.
While RERA promises quicker dispute resolution, legal battles can still drag on due to appeals, delays in hearing or lack of enforcement. Developers often challenge RERA decisions in higher courts, leading to prolonged litigation for homebuyers seeking justice. This not only delays compensation or refunds but also causes emotional and financial stress – defeating RERA’s goal of providing timely relief.
When weighing the RERA Act advantages and disadvantages, it’s clear the act has played a pivotal role in bringing transparency, accountability and structure to the Indian real estate sector. It has empowered homebuyers with legal safeguards and pushed developers towards more responsible practices. However, issues like high compliance costs, inconsistent implementation, and the exclusion of older projects continue to limit the full potential.
Despite these hurdles, well-established developers like Confident Group have embraced RERA’s guidelines, ensuring their projects remain transparent, timely and customer-focused. We have RERA-approved projects milestones. For buyers, selecting a reliable RERA-registered builder ensures a smoother, safer property investment journey. In essence, while the act may not be flawless, it marks a significant and necessary step toward a more reliable and buyer-friendly real estate environment.
1. What are the advantages of RERA?
The RERA Act offers greater transparency and accountability in the real estate sector by requiring developers to register projects and disclose all key information. It protects homebuyers through timely project delivery, standardised practices, and a dedicated mechanism for fast dispute resolution.
2. What is the 70% rule of RERA?
The 70% rule of RERA requires that 70% of the funds collected from homebuyers for a real estate project must be deposited in a separate bank account. This money can only be used for construction and land-related costs of that specific project, ensuring developers don’t divert funds to other projects and helping prevent delays and fraud.
3. Is it safe to buy RERA-approved projects?
Yes, buying a RERA-approved project is safer as it ensures transparency, timely delivery, and legal protection for homebuyers.
4. What is the main aim of RERA?
The main aim of RERA is to protect homebuyers and promote transparency, accountability, and efficiency in the real estate sector.
5. How many times can RERA be extended?
Under the RERA Act, a project’s registration can be extended only once. The extension is allowed for a maximum of one year, and only under reasonable circumstances such as natural calamities or delays beyond the developer’s control.
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