Policy Update
Riya Rawat
1. Background
The Real Estate (Regulation and Development) Act, 2016 (RERA), represents a landmark legislative intervention by the Indian Parliament, designed to bring about accountability, transparency, and efficiency in the real estate sector. Prior to RERA’s enactment, the sector suffered from systemic irregularities such as project delays, diversion of funds, and the absence of a dedicated dispute resolution mechanism. Despite its significant contribution—approximately 7 percent to India’s GDP in 2018–19 and projected to rise to 13 percent by 2025—the sector remained largely unregulated.
The growth of India’s urban population, which stood at 37.7 crore in 2011 and is expected to reach 60 crore by 2030, has exacerbated the demand for residential and commercial real estate. However, malpractices such as arbitrary definitions of carpet area, misleading advertisements, black money transactions, and the lack of grievance redressal left homebuyers vulnerable. RERA emerged as a response to this vacuum, introducing a regulatory framework to restore buyer confidence and establish accountability among developers and agents.
2. Functioning of RERA
RERA mandates the registration of all real estate projects above 500 square meters or involving more than eight apartments with the respective State Real Estate Regulatory Authority. Promoters are required to disclose detailed project information, including layout plans, timeline for completion, land title status, and approvals. Seventy percent of the funds collected from buyers must be deposited in a separate bank account to be used solely for the purpose of that particular project. This provision restricts fund diversion, one of the most prevalent issues before the enactment of the Act.
RERA also obligates developers to update project progress quarterly and prohibits any advertisement or sale before project registration. Promoters are required to compensate buyers in the event of project delays, structural defects within five years, or false promises. Furthermore, real estate agents must also register with the Authority and adhere to prescribed ethical standards.
The Act establishes a three-tier grievance redressal mechanism: the Real Estate Regulatory Authority, the Adjudicating Officer, and the Appellate Tribunal. This framework is mandated to resolve disputes within sixty days, enhancing access to swift justice.
Another notable feature of RERA is the definition and standardization of terms such as ‘carpet area’, which helps eliminate ambiguity in property measurements and curbs exploitative practices. The legislation also introduced provisions to ensure that project advertisements are accurate and not misleading, thereby protecting buyers from deceptive marketing practices. This has compelled developers to adopt a more ethical and professional approach, aligning business operations with legal compliance.
3. Performance and State-Level Implementation
The implementation of RERA across states has been uneven. As of March 2022, 30 States and Union Territories had set up Real Estate Regulatory Authorities, while 28 had constituted Appellate Tribunals. Maharashtra leads in terms of registration and adjudication, followed by Gujarat and Karnataka. Maharashtra alone has registered over 33,000 projects and more than 29,000 real estate agents.
However, some states have either diluted the provisions of the Act or delayed its full implementation. States such as West Bengal introduced alternative legislation, raising concerns over the uniformity of the legal framework. The Supreme Court has been involved in adjudicating the constitutionality of such deviations.
Moreover, many Real Estate Appellate Tribunals are functioning with interim arrangements and without adequate staffing, impeding their effectiveness. The central government, through the Central Advisory Council under RERA, has been pushing states to adopt best practices, particularly for enforcement and order compliance.
The absence of consistent digital infrastructure across states further complicates data integration and monitoring. While states like Maharashtra and Gujarat have developed robust online portals, others lag behind, limiting public access to project-related information. Bridging this digital divide is essential to ensure equitable protection for all stakeholders, irrespective of location.
4. Impact on Homebuyers and Promoters
The Act has substantially empowered homebuyers. For the first time, buyers can verify project authenticity through online state portals, access detailed information on project progress, and lodge complaints directly with the Authority. Sections 14 and 18 of the Act provide robust remedies for structural defects and delivery delays, respectively.
Buyers have also gained representation in post-possession management through the mandatory formation of Residents’ Welfare Associations (RWAs), strengthening community voice in maintenance and administrative matters. Furthermore, developers are now liable to pay interest at the same rate as that charged from buyers in the event of default, ensuring parity and fairness in contractual obligations.
From the promoter’s perspective, RERA has increased operational transparency and market discipline. Developers now face legal obligations to honour timelines and project specifications. While this has increased compliance costs and reduced speculative ventures, it has enhanced trust in the market. Developers with a credible track record have found it easier to attract institutional funding, as financial institutions regard RERA compliance as a marker of reliability.
There has also been a gradual shift in the perception of the real estate sector. What was once considered a high-risk investment domain has now gained renewed interest from retail and institutional investors due to the legal safeguards introduced under RERA. Enhanced investor confidence has a cascading effect on project financing and timely execution, directly benefiting end-users.
5. Emerging Issues
Despite the progressive intent of RERA, challenges remain in its operationalization. One of the most critical issues is the non-compliance with orders passed by Regulatory Authorities. Several developers, despite rulings, delay or default on compensation or possession, undermining the efficacy of the Act. There is also a lack of centralized data on the status of enforcement and disposal timelines, making accountability difficult to ascertain.
Another issue is the treatment of legacy stalled projects—those that were initiated before RERA came into force and remain incomplete. To address this, the Central Advisory Council has constituted a committee under Shri Amitabh Kant to propose a resolution mechanism. The SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund has also been deployed for last-mile funding of stalled but viable projects.
Moreover, the awareness level among stakeholders, especially in Tier 2 and Tier 3 cities, remains limited. Buyers are often unaware of their rights under RERA, and agents continue to operate in unregulated markets. Training programs and awareness campaigns, although planned, need robust execution.
Another emerging concern is the lack of coordination between urban local bodies and RERA authorities, especially regarding the issuance of occupancy certificates and completion certificates. Often, these authorities operate in silos, leading to bureaucratic delays and overlapping jurisdictions. Harmonising their functions can enhance overall efficiency and speed up project completion timelines.
6. Way Forward
To ensure that RERA realises its full potential, several strategic steps must be undertaken. First, state governments must fully implement the Act without dilution. Uniformity in registration, adjudication timelines, and compliance norms must be enforced. Second, the Ministry of Housing and Urban Affairs should institutionalise a centralized monitoring dashboard to track order compliance, project status, and grievance redressal metrics.
Third, awareness campaigns targeting homebuyers, real estate agents, and local panchayat officials can bridge the information gap. Collaborations with civil society organizations, legal aid bodies, and urban local bodies may enhance outreach.
Fourth, amendments to the Act may be considered to strengthen enforcement provisions, particularly concerning order execution. Real-time penalties for non-compliance, blacklisting of habitual defaulters, and fast-tracking of legacy dispute resolution mechanisms can be explored.
Finally, integrating RERA compliance with other urban development missions and digital land records can enhance transparency. This would allow for seamless tracking of project approvals, land titles, and environmental clearances.
Conclusion
RERA has indeed been transformative in reconfiguring the real estate landscape of India. By embedding accountability, institutional mechanisms, and a framework for equitable engagement between promoters and allottees, the Act has set a precedent for regulatory governance. Nevertheless, effective implementation, consistent enforcement, and inclusive awareness remain essential to consolidate the gains made. With sustained political will and administrative rigour, RERA can continue to serve as a model regulatory framework for emerging economies grappling with real estate challenges.
In the broader context of India’s urban transformation, RERA must be seen not merely as a regulatory tool, but as a cornerstone of sustainable and inclusive urban development. As cities grow and demand for housing intensifies, the assurance of fairness, transparency, and legal recourse that RERA offers will be indispensable in ensuring that development does not come at the cost of the common citizen’s rights.
References :
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About the Author– Riya Rawat is a researcher at the Impact and Policy Research Institute (IMPRI), pursuing a second master’s degree in Political Science. With a strong background in public policy, gender studies, and international relations, her research interests focus on policy development, analysis, and global affairs.
Acknowledgement– The author extends sincere gratitude to Dr. Arjun Kumar and Aasthaba Jadeja for their invaluable guidance and support.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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