Buying a property is a significant decision, often accompanied by various risks and challenges. In India, homebuyers have long faced issues such as project delays, quality concerns, and unclear pricing structures, leading to considerable financial and emotional strain. To bring transparency and protect buyers’ rights, the Indian government enacted the Real Estate (Regulation and Development) Act (RERA) in 2016, which came into effect on May 1, 2017. RERA has since become a foundational regulation, shaping a more transparent, accountable, and secure real estate environment for buyers and investors.
In this comprehensive guide, we’ll explore the key RERA guidelines every homebuyer should know. Understanding these guidelines can help you make informed decisions and protect your investment.
What is RERA, and why was it introduced?
The Real Estate (Regulation and Development) Act, 2016, commonly referred to as RERA, is a landmark piece of legislation enacted by the Indian government to bring transparency, accountability, and regulation to the real estate sector. Before RERA, the Indian real estate market was largely unregulated, leading to issues like project delays, miscommunication, discrepancies in property area definitions, and even cases of financial fraud. Buyers often found themselves at a disadvantage, with little recourse to address grievances or demand transparency. To tackle these challenges and protect the interests of property buyers, the government introduced RERA, which came into effect on May 1, 2017.
RERA mandates that each state and union territory establish a Real Estate Regulatory Authority to oversee the real estate market in their region. The main goal of this regulation is to enforce a standardized approach in real estate transactions and improve transparency in dealings between buyers and developers.
1. Mandatory RERA registration
Under RERA, builders and developers are required to register their projects with the respective State RERA authority before advertising or selling properties if:
- The project covers over 500 square meters, or
- It includes more than eight apartments across all phases.
RERA registration is essential for transparency and compliance, offering buyers legal assurance and access to accurate project details. Each state operates a dedicated RERA website where buyers can check the registration status of a project. For example, Maharashtra’s RERA portal, MahaRERA, allows buyers to verify that their property is registered and compliant with RERA guidelines. Non-registered projects cannot be advertised, protecting buyers from unapproved or fraudulent properties.
2. Standardized carpet area calculation
One of the persistent issues in real estate has been the lack of standardization in carpet area calculation. Carpet area, as defined by RERA, refers to the usable floor area inside an apartment, excluding areas occupied by external walls, service shafts, balconies, verandas, and terraces. This standardized calculation method prevents developers from inflating property prices by including non-usable areas, ensuring transparency in pricing and protecting buyers from paying for unusable space.
3. Advance payment limit
RERA restricts builders from demanding more than 10% of the property’s total cost as an advance payment before signing a formal sale agreement, known as the Builder Buyer Agreement (BBA). This provision safeguards buyers from excessive advance demands, which were previously common and financially burdensome. Payment beyond this 10% limit can only occur after signing the BBA, which must follow a standardized RERA-compliant format to avoid any ambiguity or one-sided terms in the contract.
4. Escrow account for project funds
To ensure developers use funds solely for the project for which they were collected, RERA mandates that 70% of the amount collected from buyers be deposited into a separate escrow account. This account holds the funds until the builder completes the project phases and requires certification from an architect, engineer, and chartered accountant before withdrawing the money. This measure prevents fund mismanagement, protecting buyers from financial risks associated with project delays and unfinished construction.
5. Timely project delivery and compensation for delays
Before RERA, delays in project completion were rampant, leaving homebuyers in a challenging position. RERA has introduced strict timelines for project delivery, with clear penalties for non-compliance. If a builder fails to deliver the project within the promised timeline, the buyer has two options:
- They can exit the contract and claim a full refund with interest, or
- They can stay in the agreement and receive monthly interest payments until possession.
These guidelines ensure that builders prioritize timely delivery, offering buyers recourse in cases of delay.
6. Right to information
RERA empowers buyers with the right to receive accurate and complete information about their property. Developers must disclose project details, including layout plans, approvals, completion schedules, and other key updates. Additionally, the buyer is entitled to receive all essential documents related to the property after possession. This transparency eliminates ambiguities and allows buyers to track project progress.
7. Approval for alterations in sanctioned plans
RERA mandates that any alteration in a project’s approved plan requires the written consent of at least two-thirds of the project’s allottees. This protects buyers from unauthorized changes that could impact the quality or scope of the property. Buyers can rest assured that their consent is necessary for any structural or design alterations, reducing the likelihood of unwelcome surprises post-purchase.
8. Defect liability period
Under Section 14(3) of the RERA Act, developers are responsible for addressing any structural or workmanship defects reported by buyers within five years of possession. If a buyer notifies the developer of such issues, the developer must rectify them at no additional cost within 30 days. Failure to do so entitles the buyer to appropriate compensation. This provision ensures that buyers receive quality construction and immediate resolution for structural concerns, offering peace of mind post-possession.
9. Grievance redressal mechanism
RERA established a robust grievance redressal mechanism to handle complaints swiftly. Each state is required to set up an Appellate Tribunal, where buyers can file complaints related to issues such as project delays, changes in the property plan without consent, or misleading information. The tribunal must resolve complaints within 60 days of filing, providing timely justice for aggrieved buyers.
10. Guidelines on car parking and maintenance charges
RERA has clear guidelines regarding car parking and maintenance charges, two areas that often result in buyer complaints. Developers cannot charge for open parking spaces, as these are considered common areas. However, they can sell covered parking spaces if explicitly mentioned in the agreement. Maintenance charges, on the other hand, must reflect actual expenses incurred for property upkeep, with transparent calculation methods shared with buyers. This ensures that buyers only pay for the facilities they receive, based on fair and standard pricing practices.
11. Quarterly construction updates
To keep buyers informed, RERA requires developers to provide regular updates on construction progress. Buyers who have already invested in a property are entitled to receive quarterly updates on project milestones, progress schedules, and other key information. Builders are also required to upload this information to their respective RERA portals, ensuring transparency and accountability in project timelines.
12. Standardized builder buyer agreement
RERA mandates a standard format for the Builder Buyer Agreement (BBA), minimizing the risk of one-sided clauses that favor developers. While some specific terms may vary, the overall structure must comply with RERA norms, protecting buyers from ambiguous terms or clauses. This transparency in the BBA allows buyers to understand their rights and obligations clearly, creating a more balanced agreement.
13. Transparency in project disclosures
Developers must provide detailed disclosures about their project on the RERA portal, covering property title, project layout, amenities, legal approvals, and more. These details are accessible to the public, allowing prospective buyers to research project credentials before making a purchase decision. Incomplete or misleading information is punishable under RERA, holding developers accountable for transparent communication with buyers.
14. RERA Guidelines for project completion and possession
When it comes to taking possession, RERA mandates a clear process to avoid any last-minute confusion. The possession date, along with any related terms, must be explicitly mentioned in the Builder Buyer Agreement. This measure ensures that buyers know when they can expect possession, and in the event of delays, they have a clear basis for recourse.
State-specific RERA provisions
While the Real Estate (Regulation and Development) Act, 2016 (RERA) provides a national framework, its implementation varies across Indian states to address regional real estate market nuances. Maharashtra and Karnataka have introduced specific provisions to enhance transparency and protect homebuyers.
Maharashtra (MahaRERA)
Maharashtra’s Real Estate Regulatory Authority, known as MahaRERA, has implemented several buyer-friendly measures:
- Mandatory disclosure of amenities with timelines: Developers must specify delivery timelines for promised amenities, including details like size and location, in agreements. This ensures buyers receive exactly what was promised at the time of booking.
- Third-party quality audits: MahaRERA has introduced a framework for appointing third-party agencies to audit construction quality throughout various project stages. This initiative aims to maintain high construction standards and instill buyer confidence.
- Doorstep project registration services: To facilitate compliance, MahaRERA offers project registration services at the builder’s location for projects with 50 or more residential units. This service streamlines the registration process and encourages adherence to regulations.
Karnataka (K-RERA)
Karnataka’s Real Estate Regulatory Authority (K-RERA) has tailored its rules to suit the state’s real estate landscape:
- Mandatory project registration: Developers must register any real estate project exceeding 500 square meters or comprising more than eight units with K-RERA before advertising or selling. This requirement ensures that only approved projects are marketed, protecting buyers from unregistered developments.
- Standardised carpet area definition: K-RERA mandates that properties be sold based on carpet area, prohibiting sales based on super built-up area. This standardisation provides clarity and prevents misleading area representations.
- Separate bank account for project funds: Developers must deposit 70% of the funds received from buyers into a separate bank account dedicated to the project. This measure ensures that collected funds are utilised solely for the specified project, preventing financial mismanagement.
Gujarat
Gujarat’s RERA mandates that developers must register not only new projects but also ongoing projects that have not received a completion certificate before the commencement of the Act. This ensures that a broader spectrum of projects falls under regulatory scrutiny, enhancing transparency and buyer protection.
Haryana
Haryana has established two separate RERA authorities: one for the Gurugram district and another for the rest of the state. This bifurcation allows for more focused regulation, considering the distinct real estate dynamics of the rapidly developing Gurugram region compared to other areas.
Odisha
Odisha’s RERA rules include specific provisions for registering real estate agents, requiring them to undergo a stringent process to obtain a license. This measure aims to professionalise real estate brokerage services and ensure that agents adhere to ethical standards, thereby protecting consumer interests.
How does RERA benefit homebuyers in India?
The introduction of RERA brought several key benefits for homebuyers, offering them greater transparency, legal protections, and financial security when investing in property:
- Enhanced Transparency: Developers are now required to register all their projects with their respective state RERA authorities and disclose all critical details, such as project layouts, sanctioned plans, carpet area, construction progress, and projected delivery dates. This transparency reduces misinformation and builds trust.
- Protection Against Delays: Project delays were once a major issue in Indian real estate. With RERA, developers must complete projects within the timeline agreed upon with the buyer. If they fail, buyers are entitled to interest payments or even a full refund, holding developers accountable for delays.
- Standardized Definitions: RERA establishes standardized definitions, such as a clear calculation of carpet area. This eliminates any ambiguity in property dimensions and ensures that buyers are charged fairly based on usable floor area.
- Reduced Financial Risk: To prevent misuse of funds, RERA requires developers to deposit 70% of the project funds collected from buyers into an escrow account. This measure ensures that the funds are used solely for the specific project, reducing the risk of financial mismanagement.
- Quality Assurance: RERA enforces a defect liability period of five years from the date of possession. If any structural or quality issues arise during this period, developers are required to fix these defects free of cost. If unresolved within 30 days of intimation, buyers can claim compensation, ensuring that developers uphold quality standards.
- Streamlined Grievance Redressal: RERA mandates each state to set up a Real Estate Appellate Tribunal where buyers can file complaints against developers for non-compliance. This platform ensures timely resolution, generally within 60 days of filing, giving buyers a quick and accessible grievance redressal mechanism.
How can a buyer verify if a project is RERA-registered?
Verifying if a project is RERA-registered is essential for homebuyers in India, as it ensures the project complies with all regulatory standards and offers legal protection. Here’s a step-by-step guide on how buyers can check a project’s RERA registration status:
1. Visit the state’s RERA website
Each state in India has its own RERA website, where details of registered projects and developers are available. To check if a project is registered:
- Go to the RERA website for the state where the project is located.
- Most RERA websites have a “Search Registered Projects” or “Project Registration” tab for easy access.
2. Use the project or developer’s registration number
Developers are legally required to provide the project’s RERA registration number in their promotional materials and on-site. Buyers can use this unique registration number to search on the state’s RERA website and view details like:
- Project location and status
- Approvals obtained
- Expected completion date
- Project specifications
3. Search by project name or developer
If the registration number is not readily available, buyers can also search by entering the project’s name or the developer’s name on the RERA portal. This can reveal if the project is registered and display important project information, including:
- Project layout and floor plans
- Legal approvals and NOCs obtained
- Developer’s previous project records
4. Verify project details on the RERA portal
Once the project appears in the search results, buyers should check all the details listed on the RERA website against what the developer has advertised. Ensure that the floor plans, completion dates, and amenities match the promotional information provided by the developer. Any discrepancies can be a red flag.
5. Check for project updates and status
RERA mandates that developers update the project’s progress regularly on the portal. Buyers can review these updates to confirm if the construction is on schedule or if there have been delays. This feature gives buyers transparency and helps them track the project’s development.
6. Confirm RERA registration expiry
RERA registrations come with a validity period based on the projected timeline for completion. Buyers should check the expiration date of the project’s RERA registration to ensure that it is active and aligns with the developer’s completion schedule. This step is essential as an expired RERA registration may indicate delays or issues.
7. Contact the RERA helpdesk (If necessary)
If buyers face difficulties finding a project on the RERA website or need further clarification, they can reach out to the respective state’s RERA authority helpdesk. Most RERA portals have contact information and a helpline to assist buyers with queries.
How can a developer’s track record be verified using the RERA portal?
Verifying a developer’s track record through the RERA (Real Estate Regulatory Authority) portal is crucial in ensuring a secure real estate investment. Here’s how you can assess a developer’s credibility using the RERA portal:
1. Access the official RERA website
Each Indian state has its own RERA portal. Ensure you visit the official website corresponding to the state where the property is located. For instance, for properties in Maharashtra, access the MahaRERA portal.
2. Navigate to the ‘registered projects’ or ‘project registration’ section
On the homepage, locate the section labelled ‘Registered Projects’ or ‘Project Registration.’ This area allows you to search for projects and developers registered under RERA.
3. Search for the developer
Enter the developer’s name in the search bar provided. The portal will display a list of projects associated with that developer.
4. Review project details
Click on individual projects to access comprehensive information, including:
- Project Status: Current progress, completion timelines, and any delays.
- Approvals and certifications: Details of legal approvals, layout plans, and certifications obtained.
- Past projects: Information on previously completed projects by the developer.
5. Assess compliance and complaints
Examine any complaints or legal issues associated with the developer or their projects. The RERA portal often provides information on disputes and their resolutions, offering insight into the developer’s reliability.
6. Verify documentation
Ensure the developer has uploaded all mandatory documents, such as land titles, environmental clearances, and building approvals. The absence of essential documentation can be a red flag.
7. Cross-check information
Compare the details on the RERA portal with the information provided by the developer. Discrepancies may indicate potential issues.
Are RERA regulations the same across all states in India?
No, RERA regulations are not uniform across all states in India. While the Real Estate (Regulation and Development) Act, 2016, serves as a central framework, each state and union territory is responsible for establishing its own Real Estate Regulatory Authority and implementing RERA with localized guidelines. This allows states to adapt RERA to their specific market needs, but it also means that RERA rules and regulations can vary significantly from one state to another. Here’s how and why these variations exist:
1. Independent RERA authorities for each state
Each state has its own RERA authority to enforce the Act and regulate the local real estate sector. These authorities oversee project registrations, complaints, and grievances within their jurisdictions, meaning that processes, timelines, and even penalties can differ depending on the state.
2. Variations in compliance rules
Although the central Act sets a baseline, states may introduce specific rules around compliance, project registration fees, and the details developers must disclose. For example, some states might enforce stricter penalties for project delays or have additional clauses regarding environmental compliance and land use, tailored to their regional contexts.
3. Differences in project registration requirements
The criteria for what qualifies as a “registered project” may vary by state. While all commercial and residential projects above a certain size must register under RERA, the threshold area or number of units required for registration can differ by state, based on the local market’s scale and dynamics.
4. Local guidelines on grievance redressal
The grievance redressal mechanisms under RERA are customized in each state. For instance, timelines for resolving complaints might vary, and some states might have more efficient online systems for complaint filing. Additionally, certain states have specialized benches or appellate tribunals to handle real estate disputes faster.
5. Differences in penalties and interest rates for delays
RERA allows states to determine the interest rate developers must pay to buyers in cases of project delays. As a result, the interest rates or penalty charges imposed on non-compliant developers can differ significantly between states, impacting both buyer compensation and developer accountability.
6. Special provisions for state-specific concerns
Some states have introduced unique provisions to address local concerns. For example, states with a high concentration of rural land or environmentally sensitive areas may have additional rules for sustainable development, while states with high urbanization may enforce stricter building codes and safety measures.
7. Level of digital accessibility
The effectiveness of RERA also depends on how each state’s RERA authority operates. Some states have developed advanced online portals that offer digital access to project information, registration status, and complaint tracking, while others may rely more heavily on offline processes, which can impact transparency and ease of access.
Housing.com POV
The introduction of RERA has revolutionized India’s real estate sector, providing much-needed structure, accountability, and protection for buyers. By enforcing strict guidelines for developers, RERA ensures timely delivery, quality construction, and financial transparency. For prospective buyers, understanding these RERA guidelines is critical to safeguarding their investment and ensuring a smooth home-buying experience.
If you’re planning to purchase property, familiarizing yourself with RERA’s provisions can empower you to make a well-informed decision. As the real estate landscape in India continues to evolve, RERA remains a fundamental law, promoting trust and transparency and making property transactions more secure for Indian homebuyers.
FAQs
What is RERA, and why is it important for homebuyers?
RERA, or the Real Estate (Regulation and Development) Act, was introduced to protect homebuyers by ensuring transparency, accountability, and fairness in the real estate sector. It mandates developers to register their projects under RERA, so buyers can verify details like completion timelines, project approvals, and the builder’s track record before making a purchase.
How does RERA benefit buyers during property transactions?
RERA protects buyers by enforcing strict guidelines on developers. It ensures that developers deliver projects on time, adhere to the promised specifications, and avoid misleading advertisements. Additionally, RERA requires developers to disclose detailed project information, making the buying process more transparent and reducing the risk of fraud.
Are RERA regulations the same across all states in India?
While RERA is a central law, each state in India has its own RERA authority and can adapt certain provisions based on local requirements. This means that while the core objectives remain the same, some specific guidelines or rules may vary from state to state. Buyers should check their state’s RERA portal for any state-specific regulations.
How can I verify if a project is RERA-registered?
Buyers can verify if a project is RERA-registered by visiting the RERA website of the respective state where the project is located. They can search by the project’s name, developer’s name, or the RERA registration number provided by the developer to access detailed information about the project, its timeline, approvals, and current status.
What are the consequences for developers if they don’t comply with RERA guidelines?
Non-compliance with RERA can result in severe penalties for developers, including hefty fines, project registration cancellations, or imprisonment in extreme cases. These penalties are in place to protect buyers and ensure that developers meet their commitments as per RERA guidelines, thus reducing the risk of project delays or misinformation.
