Why was RERA (2016) Enacted?

RERA Apr 7, 2021

Prior to the enactment of the Real Estate (Regulation and Development) Act, 2016 (the ‘Central Act’), there was no single regulator governing the real estate sector in India. The Central Act was passed to protect the interests of real estate purchasers and promote an environment of transparency in the real estate sector.

So why was the Central Act enacted?

  • There was low compliance with the regulatory framework governing real estate in each State by the real estate developers. This led to a trust deficit between buyers and developers.[1]
  • Parties transacting in real estate had to fulfil compliance requirements from multiple government agencies which varied by State. These were not always known to the applicant beforehand, making it impossible for them to ascertain the timelines for obtaining the necessary approvals.
  • According to a 2014 report published by the Federation of Indian Chambers of Commerce and Industry (FICCI), it took anywhere between 2.5 and 4 years to obtain all the permissions ranging from Change of Land-Use to occupancy certificate as given in the table below-

Has the Central RERA Act remedied these drawbacks?

It is difficult to evaluate the impact of the Central Act at this stage. State governments only started enacting their respective RERA Acts and establishing their regulatory authorities in 2017. A few states even established them in 2020. Till date, 10 States have not established permanent regulatory authorities. (You can find a detailed review of the implementation of RERA in different States in our white paper).

  • Possible to reduce trust deficit- The Central Act and the State RERA regulations can potentially address the trust deficit that existed between buyers and developers because they make it mandatory for the promoter to upload the registration details related to his project. Such a provision is bound to help consumers make an informed decision about the promoter and the relevant project.[2]
  • Registration with RERA is still time-consuming- While the State RERA guidelines specify the requirements to be fulfilled on their websites making the process more transparent, RERA still requires the applicant to obtain multiple compliances from several government agencies. Thus, he still has to obtain the requisite permits as he had to before the Central Act was passed.

Image by Yagnik Nanera, Unsplash.

[1] Indian Institute for Human Settlements (2018)- Ironing Out the Difficulties in Implementing RERA, 2016

[2] TEAL White Paper (2021)- Key Features and State-wise Implementation of the Real Estate (Regulation and Development) Act (2016)

At TEAL, we are building the next generation of property due diligence using big data analytics and machine learning. We provide reliable information about property ownership, registration status, disputes, tax compliance history and all other information that you will need to make a safe and secure property investment. To learn how TEAL can help you in your journey, visit tealindia.in.


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