The Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to improve transparency, accountability, and discipline in India’s real estate sector. It aims to protect homebuyers, reduce delays, and curb misleading practices, ensuring that both residential and commercial projects are regulated more effectively. By creating a structured and reliable framework, RERA has strengthened trust in property transactions and improved the sector’s overall credibility. This increased transparency also supports financing options such as loans against property, as lenders can assess projects with greater confidence. By using the value of your existing property, you can access substantial funds with convenient repayment choices and competitive interest rates. Explore our loan against property offerings to find the solution that fits your needs.
What is Real Estate (Regulation and Development) Act, 2016
The Real Estate (Regulation and Development) Act, 2016was passed to regulate and promote the growth of the real estate industry in India. The law aims to ensure transparency in property transactions and to create a more efficient and accountable real estate ecosystem. One of its key features is the establishment of a Real Estate Regulatory Authority (RERA)in each state to oversee the registration of real estate projects and agents, resolve disputes, and ensure that developers adhere to the terms set forth in agreements with buyers. The law also protects the interests of homebuyers, ensuring that they receive timely possession of their properties and are not misled by builders regarding project timelines, property specifications, and more.
The Act applies to both residential and commercial real estate projects, ensuring that developers meet certain standards and responsibilities. It also aims to streamline property transactions and safeguard homebuyers from fraud, irregularities, and delays. Importantly, it addresses issues such as delayed projects, changes in approved plans, and unresolved disputes by providing a legal framework for resolution.
The Real Estate (Regulation and Development) Act, 2016
The Real Estate (Regulation and Development) Act, 2016 ensures transparency, accountability, and fairness in India’s property market. It sets guidelines for project registration, protects homebuyers’ interests, and regulates developers and agents to create a more organised real estate ecosystem.
Chapter No. |
Title of the Chapter |
Sections Covered |
I |
Preliminary |
1 and 2 |
II |
Registration of Real Estate Project and Real Estate Agents |
3 to 10 |
III |
Function and Duties of Promoter |
11 to 18 |
IV |
Rights and Duties of Allottees |
19 |
V |
The Real Estate Regulatory Authority |
20 to 40 |
VI |
Central Advisory Council |
41 and 42 |
VII |
The Real Estate Appellate Tribunal |
43 to 58 |
VIII |
Offences, Penalties and Adjudication |
59 to 72 |
IX |
Finance, Accounts, Audit and Reports |
73 to 78 |
X |
Miscellaneous |
79 to 92 |
Objectives of the Real Estate (Regulation and Development) Act, 2016
Here are the key objectives of the Real Estate Act, 2016:
- Improved transparency: RERA ensures buyers receive accurate information about project plans, timelines, and features, reducing the chances of misleading advertisements or exaggerated claims.
- Stronger buyer protection: The Act requires developers to follow approved specifications, maintain construction quality, and provide a clear mechanism for resolving customer complaints.
- Regulated real estate agents: All agents involved in selling or marketing properties must register under RERA and operate with fair, accountable practices.
- Assured project timelines: Developers must complete projects within the promised schedule, helping reduce delays and improving trust in under-construction properties.
- Uniform documentation: RERA mandates standardised formats for agreements and property documents, making transactions more transparent, consistent, and legally secure for homebuyers.
Key definitions under the Real Estate (Regulation and Development) Act
Key definitions under the Real Estate (Regulation and Development) Act help buyers, developers, and stakeholders understand the roles and responsibilities outlined in the law. These definitions create uniformity, reduce ambiguity, and support smoother real estate transactions.
| Term | Definition |
| Developer/ promoter | A person or entity responsible for the development of a real estate project and the sale of apartments. |
| Real estate agent | A professional intermediary who assists in the buying, selling, or leasing of real estate properties. |
| Project | A building or development that includes residential or commercial properties and infrastructure. |
| Defects | Any structural defect or poor workmanship in a property, typically covered under a warranty. |
| RERA | Real Estate Regulatory Authority that oversees the registration of real estate projects and real estate agents. |
Establishment and functions of the Real Estate Regulatory Authority (RERA)
Under the Real Estate (Regulation and Development) Act, 2016, the establishment of a Real Estate Regulatory Authority (RERA)is mandated in every state. RERA serves as an independent body to regulate the real estate sector and ensure that developers adhere to the standards and provisions set under the Act. The authority is tasked with:
- Project registration: Ensuring all residential and commercial real estate projects are registered before their launch.
- Regulation of real estate agents: RERA also registers real estate agents to ensure transparency and accountability in transactions.
- Resolving disputes: RERA functions as a mediator and arbitrator in disputes between homebuyers and developers, offering a timely resolution process.
- Monitoring compliance: RERA monitors the compliance of developers with regulations concerning project approvals, timelines, and quality standards.
- Promoting consumer awareness: It educates consumers about their rights and responsibilities in property transactions.
Registration process for real estate projects and agents
Project registration: Developers must register all residential and commercial projects with RERA before advertising or selling units. The registration includes providing project details such as land title, approvals, completion timelines, and other essential project information.
Real estate agent registration: Real estate agents must also register with RERA to legally operate in the market. They are required to adhere to the guidelines, ensuring transparent and ethical practices.
Rights and duties of homebuyers under the Real Estate (Regulation and Development) Act
- Right to timely possession: Homebuyers are entitled to receive possession of their property within the timeline specified in the agreement for sale, ensuring projects are delivered as promised.
- Right to expected quality: Buyers have the right to receive a property that matches the specifications, amenities, and standards outlined in the agreement. Any structural defects discovered within five years must be rectified by the developer at no additional cost.
- Right to raise complaints: In cases of delays, quality issues, false commitments, or other non-compliances, homebuyers can file complaints with the RERA authority. If unsatisfied with the decision, they may appeal before the Appellate Tribunal.
- Right to necessary documents: After taking possession, buyers have the right to receive essential documents such as the completion certificate, layout plans, and papers relating to common areas.
- Duties of homebuyers: Buyers must pay instalments, taxes, and other charges on time, follow the terms of the agreement, and participate in necessary documentation and registration formalities.
Obligations of promoters and developers under the Real Estate (Regulation and Development) Act
Disclosure of project details: Developers must disclose full details of the project, including land title, development timeline, and completion date, to homebuyers.
- Completion and possession: Developers must complete the project as per the agreed timeline and hand over possession to buyers on time.
- Quality assurance: Developers are obligated to ensure that the construction quality meets the standards and complies with all approved plans.
- Title and legal compliance: Developers must guarantee that the land title is clear and that all necessary legal approvals are in place.
Penalties and offenses as per the Real Estate (Regulation and Development) Act, 2016
The Real Estate (Regulation and Development) Act, 2016 imposes strict penalties for violations, including project delays, misrepresentation, and non-compliance, ensuring accountability and protecting homebuyers’ rights.
| Offense | Penalty |
| Failure to register a project | Penalty of up to 10% of the estimated cost of the project. |
| Delays in completion | Penalty for developers failing to complete the project on time as per agreement. |
| False advertising | Developers or agents engaging in misleading advertisements face penalties. |
| Non-compliance with RERA orders | Penalty and possible imprisonment for non-compliance with RERA rulings. |
Grievance redressal mechanism under the Real Estate Act 2016
One of the core features of the Real Estate (Regulation and Development) Act, 2016is the establishment of an effective grievance redressal mechanism. Homebuyers can approach RERA to lodge complaints regarding project delays, quality issues, or violations of the agreement. The Act mandates RERA to resolve these disputes within a fixed timeline. It provides a mechanism for quick resolution without the need for prolonged court proceedings, promoting consumer trust and protection.
Impact of the Real Estate (Regulation and Development) Act on the real estate sector
The Real Estate (Regulation and Development) Act, 2016has brought significant reforms to the real estate sector. Some of its major impacts include:
- Increased consumer confidence: Homebuyers now have legal protection, leading to increased trust in real estate transactions.
- Regulated market: The Act has helped regulate the real estate market by making developers and real estate agents accountable for their actions.
- Faster project delivery: Developers are now more likely to deliver projects on time due to the stringent timelines imposed by RERA.
- Improved transparency: The Act mandates that all project details, including approvals, layouts, and completion dates, be made available to the public, promoting transparency.
Recent amendments and updates to the Real Estate (Regulation and Development) Act, 2016
Several amendments have been made to the Real Estate (Regulation and Development) Act to keep up with the changing dynamics of the real estate market. Some notable updates include:
- Revised penalties: The penalties for non-compliance with RERA regulations have been revised to make enforcement more stringent.
- Inclusion of affordable housing: Recent updates have included provisions specifically for the development of affordable housing projects, making them more accessible to lower-income groups.
- Property tax adjustments: Recent updates have clarified how property tax to be handled within the purview of RERA, aligning with other taxation reforms.
Salient features of the Real Estate (Regulation and Development) Act, 2016
- Strengthen regulation of real estate: Establish a dedicated Real Estate Regulatory Authority to oversee and streamline the functioning of the sector.
- Promote transparent sales: Ensure that the sale of plots, apartments, and buildings is carried out in a fair and efficient manner across all projects.
- Protect homebuyers: Safeguard buyers from fraud, delays, and malpractice by enforcing strict accountability on developers.
- Enable fast dispute resolution: Set up a robust grievance redressal system, along with Appellate Tribunals to hear appeals and resolve disputes quickly.
- Create state-level regulators: Mandate the formation of RERA authorities in every state to ensure uniform implementation of the Act.
- Make project registration compulsory: Require all residential and commercial real estate projects to be registered before advertising, selling, or promoting them.
- Ensure information disclosure: Oblige developers to upload project details, such as layout plans, timelines, and specifications, on the official RERA website.
- Regulate transfer of project rights: Require two-thirds consent from allottees and approval from RERA before a developer can transfer major rights or responsibilities to a third party.
- Define financial liability in case of default: Ensure that both the promoter and the buyer share equal financial responsibility if either party defaults as per the agreement.
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Conclusion
The Real Estate (Regulation and Development) Act, 2016, has transformed the Indian real estate landscape by ensuring greater transparency, accountability, and consumer protection. The establishment of RERA has brought much-needed regulation to the sector, benefiting both homebuyers and developers. The Act continues to evolve with time, addressing issues such as delayed projects, quality concerns, and illegal practices. As the Indian real estate sector continues to grow, the Real Estate Development Act remains a vital tool in promoting fairness and efficiency in property transactions.
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