Three states yet to roll out RERA, others have diluted version

Why in News?

  • West Bengal, Kerala and Assam are yet to implement the pro-consumer Real Estate regulation and Development Act (RERA) while states which have done so have rolled out watered down versions.


What is RERA?

  • 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 came into force from 1 May 2016.
  • Its objective is to make known the status of building approvals, to enable customers to make accurate decisions.
  • The Act aims to take steps to promote affordable housing for everyone.
  • RERA would bring accountability and transparency into the real estate sector and is expected to restore confidence among buyers who are sceptical about quality of construction and timely completion of projects.
  • RERA has clauses for heavy penalties if a developer deviates from promises made to buyers while selling a property.


  1. Independent Regulatory Authority: Real estate regulatory authorities (RERAs) will be established in every state and be paired with real estate appellate tribunals (REATs) to consider appeals against orders of RERAs. All commercial and residential projects now need to be compulsorily registered with RERA.
  2. Prevention of diversion of funds: The Bill now provides for a compulsory deposit of 50 per cent of the total amount realised from buyers into a monitor able account in a scheduled bank to be used only for the construction of the designated project. This will help in less diversion of funds but it is lesser than initially speculated 70% so some funds may still be diversified to chit funds.
  3. Mandating consumer protection measures:
    1. Specification of project cannot be altered without consent of two-thirds of buyers
    2. Prevention from accepting more than 10% advance fees without written agreement.
    3. Stringent penalties in case of violation and right to reclaim refund in case of promoter failure of delivery.
    4. Promoter needs to declare carpet area
  1. Mandatory Registrations with RERA: Under RERA, all commercial and residential real estate projects with land over 500 square meters or more than 8 units should register under this Act. Only projects registered with RERA can be bought or sold.


Diluted Version of RERA

  • The states in which RERA is already implemented, the proportion of unregistered projects are very high, piling hardship on thousands of homebuyers.
  • The developers are trying to sidestep the act and the authority, by not registering the project with authority.
  • Most of these unregistered projects are defaulters in term of delay in completing the project or not fulfilling all the obligations listed in the sales agreement with buyers.
  • Delay in project execution because of dilution of Rera, and the signal such dilutions send to the market, will act as a dampener on buyers’ confidence. This will affect developers’ ability to sell


What can be done?

  • The authority has the power to issue notices to defaulter developers and can send notice to them suo-moto to get their projects registered.
  • For example in Karnataka, the second most active state in implementing Rera, the authority has sent notices to 100-130 projects in Bengaluru for not registering under Rera in 2017 while 953 project applications are still under investigation, according to a report. In total, in Karnataka 2,982 projects are registered with Rera.
  • Failure to register the property can lead to the builder facing a 10 percent penalty or up to three years in prison.

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