The impact of RERA (Real Estate Regulatory Authority) on the Indian Residential Market

impact of RERA or Real Estate Regulatory Authority

The real estate sector is one of the substantial contributors to the economic growth of India. However, delays in housing projects throughout India have significantly affected the real estate sector business model and the consumers. In order to reduce the delays in housing projects, Parliament introduced the Real Estate (Regulation and Development) Act 2016. This act aimed to address the issues between homebuyers and developers by providing transparency and safeguarding home buyer’s rights. Here is everything you need to know about RERA and its impact on the Indian residential market.


Previously, developers made alterations to a project without intimating homebuyers. Some developers do not even share the project plan with the buyers, keeping them in the dark. With the introduction of RERA, developers have to comply with specific rules. Before this, the real estate market was unregulated, and homebuyers had to run here and there to make developers accountable in case of fraud.

RERA has eradicated the problems within the real estate sector, such as project delays. Before RERA, consumers had to bear the expenses of the project delays, but now all the expenses have to be made by developers. A real estate property consultant will provide you with detailed information about the RERA Act, so you can consult them.

After the RERA Act, developers have to comply with the following requirements:

  • If any modification has to be done in the project, home buyers must be prior informed.
  • For any addition, modification or alteration, there shall be consent of about 2/3rd allottees.
  • Developers must provide prior information such as project plan, layout and government approvals to home buyers. 
  • They have to follow a customer-centric approach where priority is given to timely project completion and giving possession of the home as soon as possible.

Is RERA mandatory?

As per the RERA Act, all real estate projects shall be registered with the state’s RERA. Any project that started before the introduction of the RERA Act must comply with registration under the RERA Act. Also, to register under RERA, one needs to provide detailed information about the project to the concerned authorities. Developers can only market the project after obtaining the necessary registration and getting all the approvals.

What is a Reserved Account?

Significant diversion of collected funds from one to another projects results in unwanted delays. RERA Act has prevented this issue by making it mandatory for the developers to keep 70% of the project-collected funds in a separate reserve account. Also, all the money in the separate account must only be used for the ongoing project, and all the transactions must be duly certified by a professional to ensure there is no misuse of the funds.

Another issue was that homebuyers were not informed of the time-to-time progress of the project. But with the RERA Act, now homebuyers can keep an eye on the development of the projects on the RERA website. This compulsory disclosure from the developer’s end will give transparency to the consumer, which can help them make a better decision.

Also Read: The Future of Residential Real Estate

Impact of RERA on Real Estate Sector

RERA is working in many ways to provide sustainable growth to the real estate sector. Now, developers have to work within the strict regulations of the regulatory authorities. As there are risks involved in working on multiple projects, they will focus more on the completion of a single project, which means consumers are likely to get their homes within the time frame.

Moreover, developers have to provide authorities with the specific time and duration when the project will be completed. If they fail to complete within the time frame, strict action will be taken against them. So, we can say that the RERA Act would bring the trust of the consumer back to the real estate sector. It also helps the developer/builder in case the beneficiary delays the payment, as the builder can approach the authority when a buyer is at fault.


It is challenging for a developing nation like India to provide accommodation to all its citizens. And in India, buying a home is more than a financial decision. However, if fraud and delays continue to happen, people will be discouraged from investing in the real estate sector, which is not good for the progress of the country.  The RERA Act has shown a light by providing autonomy to consumers and developers. And we believe further reforms will be done in real estate to facilitate investing in this sector.

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