Real Estate (Regulation & Development) Act, 2016

The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry.

The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal.

The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016.

The Act came into force on 1 May 2016 with 59 of 92 sections notified. Remaining provisions came into force on 1 May 2017.

An act to establish the real estate regulatory authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building ,as the case may be,or sale of real estate project ,in an efficient and transparent manner and to protect the interest of the consumers in the real estate sector.


The Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project.

For ongoing projects which have not received completion certificate on the date of commencement of the Act, will have to seek registration within 3 months.

Application for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA.

On successful registration, the promoter of the project will be provided with a registration number, a login id, and password for the applicants to fill up essential details on the website of the RERA.

For failure to register, a penalty of up to 10 percent of the project cost or three years’ imprisonment may be imposed.

Real estate agents who facilitate selling or purchase of properties must take prior registration. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.

RERA must grant/reject an application within 30 days of submission of all required documents


What is Real Estate Regulatory Authority (RERA)?

Under a new law, states have to establish Regulatory Authority (RERA) which is a special body dealing with the real estate sector.

  • Compulsory registration of new and ongoing projects.
  • If the builder or developer has already obtained the completion certificate, they do not have a duty to register their project under this law.
  • They are not required to register projects which are very small less than 500 square meters and the number of apartments is less than eight. This exemption might differ from state to state.
  • Once the registration is granted by the Regulatory Authority, the builder or developer has to publish entire details of their projects on the website of the Regulatory Authority.
  • If the builder or developer has not handed over the property by the date mentioned in your agreement for sale , you have the right to withdraw from the project.
  • If you choose to withdraw from the project, you have the right to be compensated for the full amount you have paid till date along with interest.
  • If you choose not to withdraw from the project, you have the right to be compensated with interest for every month of delay.
  • If the builder or developer is not voluntarily compensating you, you have the right to file a complaint before the Regulatory Authority.
  • You need not compulsorily hire a lawyer to represent yourself. You can appear yourself or even hire a chartered accountant or cost accountant or company secretary.
  • If you are not satisfied with the decision of the officer, you can file an appeal before the Appellate Tribunal set up under this law within 60 days.


Time period within which the Regulatory Authority is required to dispose the complaint:

The new law states that the Regulatory Authority should dispose of the complaints within 60 days from the date of filing. However, the Authority can take more time and is only required to record the reasons for not completing the proceeding within the 60 day period.

Protection of buyers:

The Act prohibits unaccounted money from being pumped into the sector and as of now 70 per cent of the money has to be deposited in bank accounts through cheques is now compulsory.

A major benefit for consumers included in the Act is that builders will have to quote prices based on carpet area not super built-up area, while carpet area has been clearly defined in the Act.

The builder must rectify any issue faced by the buyer within 5 years of purchase.

Developers and builders cannot ask for more than 10% of the

property’s cost as an advance Payment before the sale agreement is signed.

RERA impact on real estate:

  • Dishonest builders will disappear as they will fail to sustain in the market after the RERA Act is implemented.
  • The 32 sections that have been added to the Real Estate (Regulation and Development) Act, 2016 will encourage a financial discipline in this sector.
  • After the Act implementation, the developers will have to follow several formalities if they wish to make certain changes to the project after its commencement.