Home Money RERA ACT 2016 – the powerful Real Estate act!

RERA ACT 2016 – the powerful Real Estate act!

RERA, Real Estate Act
RERA Act 2016

RERA – the real estate regulation act of India. Real Estate business contributes around 9% of the Gross Domestic Products (GDP) in India. It was a big relief for Indian home buyers, when the Real Estate Regulation Act 2016 came into existence effective 1st May 2017.  It is an Act of Parliament of India that seeks to protect home buyers as well as improving investments in real estate. The bill was initially passed by Rajya Sabha on 10th March 2016 and by Lok Sabha on 15th March 2016.

Let’s look at some of the key facts about RERA in this article.

RERA Registration:

The Real Estate Act makes it mandatory for all the commercial and residential projects, where the project is over 500 square meters/eight apartments to register with Real Estate Regulatory Authority. This is to bring transparency in projects with marketing and execution. If the projects were under construction and not received the completion certificate on the date of commencement of the Act, will need to seek registration within 3 months. Once registered, the promoter of the project will be provided with the login id and password to fill necessary details on the RERA Website (the website would be different for different states).

Real Estate Agents:

The Act is applicable for real estate agents as well. Agents who facilitate in selling or purchasing a property should obtain prior approval from RERA. Post registration, they will be given with the single registration number for each state or union territory. The registration number should be quoted by the agent during each transaction.

What is the punishment if not registered under RERA?

Now the question arises, what happens if the project is not registered with RERA. Well, the authority has all the rights to impose a penalty up to 10 percent of the project cost or the imprisonment up to 3 years.

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What should a builder do as per RERA Act?

Some of the important compliance the builder has to follow are:

  • Informing allottees about any minor addition or alteration.
  • Consent of 2/3rd allottees about any other addition or alteration.
  • No launch or advertisement before registration with the authority
  • Consent of 2/3rd allottees for transferring majority rights to 3rd party.
  • Sharing information project plan, layout, government approvals, land title status, sub-contractors.
  • Increased assertion on the timely completion of projects and delivery to the consumer.
  • An increase in the quality of construction due to a defect liability period of five years.
  • Formation of RWA within specified time or 3 months after majority of units have been sold.

RERA definition of carpet area:

The area of a property is often calculated in three different ways – carpet area, built-up area and super built-up area. Hence, when it comes to buying a property, this can leads to a lot of disconnect, between what you pay and what you actually get.

Gautam Chatterjee, Maharashtra RERA chairman, explains that “It is now mandatory for the developers of all ongoing projects, to disclose the size of their apartments, on the basis on carpet area (i.e., the area within four walls). This includes usable spaces, like kitchen and toilets. This imparts clarity, which was not the case earlier.”

According to the Act, carpet area is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

Impact of RERA on real estate industry:

  • Initial backlog.
  • Increased project cost.
  • Tight liquidity.
  • Rise in cost of capital.
  • Consolidation.
  • Increase in project launch time.

Which projects come under RERA?

  • Commercial and residential projects including plotted development.
  • Projects measuring more than 500 sq mts or 8 units.
  • Projects without Completion Certificate, before commencement of the Act.
  • The project is only for the purpose of renovation / repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under this act.
  • Each phase is to be treated as standalone real estate project requiring fresh registration.

What information does a builder need to provide under RERA?

  • Number, type and carpet area of apartments.
  • Consent from affected allottees for any major addition or alteration.
  • Quarterly updating of RERA website with details such as unsold inventory and pending approvals.
  • Project completion time frame.
  • No false statements or commitments in advertisement.
  • No arbitrary cancellation of units by promoter.

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How to register projects under the Real Estate Act?

  • Authenticated copy of all approvals, commencement certificate, sanctioned plan, layout plan, specification, plan of development work, proposed facilities, Proforma allotment letter, agreement for sale and conveyance deed to be given when
  • Applying for project registration with RERA.
  • Mandatory registration of new and existing projects with RERA before launch.
  • Registration of agents/brokers with RERA.
  • Dispute resolution within 6 months at RERA and RERA appellate tribunals.
  • Separate registration of different phases of a single projects.
  • Developers to share details of projects launched in last 5 years with status and reason for delay with the authority.
  • Timely updating of RERA website.
  • Maximum 1 year extension in case of delay due to no fault of developer.
  • Annual audit of project accounts by a CA.
  • Conveyance deed for common area in favour of RWA.
  • Construction and land title insurance.
  • Project completion time period.

When and how should you file a complaint under the Real Estate Act?

Digbijoy Bhowmik, head of policy, RICS, explains, “Complaints can be filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016, either with the Real Estate Regulatory Authority or the adjudicating officer. Such complaints may be against promoters, allottees and/or real estate agents. Most state government rules, made appurtenant to the RERA, have laid out the procedure and form, in which such applications can be made. In the case of Chandigarh UT or Uttar Pradesh, for instance, these are placed as Form ‘M’ or Form ‘N’ (common with most other states and union territories).”

A complaint under the RERA, is required to be in the form prescribed under the respective states’ rules. The complaint can be filed with respect to a project registered under the Act, within the prescribed time limit, for violation or contravention of provisions of the act or the rules or regulations framed under RERA.

“For cases pending before the NCDRC or other consumer fora, the complainants/ allottees can withdraw the case and approach the authority under the RERA. Other offences (except complaints under Section 12, 14, 18 and 19) can be filed before the RERA authority,” explains Ajay Monga, partner at SNG & Partners law firm.


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