RERA (Real Estate Regulatory Authority)

Imagine you book a flat in 2012. You pay a large part of the price upfront. The brochure promises possession in two years. Years pass, and the building is still a skeleton. You cannot cancel, and you cannot complain anywhere useful. For years, this was a common story. In 2016, Parliament passed a law to change it. That law is RERA.

1What Is RERA and What Problem Does It Solve?

• RERA stands for the Real Estate (Regulation and Development) Act, 2016. It regulates how real estate projects are sold.
• The Act came from a long buyer demand for a fair deal. Complaints used to go to consumer courts, which were slow and not built for builders.
• Before it, a builder could collect money for many projects and spend it on whichever one he liked. Buyers had little protection.
• The Act became fully operative on 1 May 2017. It applies to ongoing projects as well as new ones.
• Every State and Union Territory must set up its own Real Estate Regulatory Authority.
• So RERA is a central Act, but the regulators are state-level bodies. There is no single national RERA authority.
• States cannot water the law down with their own version. In 2021, the Supreme Court struck down West Bengal’s separate housing law, HIRA, because RERA already covered the field.
• Real estate agents must register too. Only registered agents can deal in registered projects.

2Which Projects Must Register, and Where Does Buyers’ Money Go?

• Not every small building needs to register. Under Section 3, a project must register if its land exceeds 500 square metres, or if it has more than 8 apartments.
• Registration must happen before any advertising, marketing or sale. This forces the builder to disclose project details up front.
• A buyer can then check a project’s registration before paying a single rupee.
• Now the money. A builder must put 70 percent of what buyers pay into a separate escrow account.
• This money can be used only for that project’s own land and construction costs.
• The rule stops a builder from moving money from one project to another. It also limits the risk of a builder running off with it.
• A builder also cannot take more than 10 percent of the price as an advance without a written agreement for sale.

3Why Does Carpet Area Matter?

• Before RERA, builders advertised the “super built-up area”. It included walls, lobbies and shared spaces. A buyer often paid for space he could never use.
• RERA says flats must be sold by carpet area. This is the net usable floor area of the flat.
• It includes the internal walls but leaves out common areas.
• Think of buying vegetables by the weight of the whole basket, including the basket. Carpet area removes the basket from the weight.
• So buyers can compare projects fairly, and pricing becomes more honest.

4What Can a Buyer Do If the Builder Is Late or the Building Is Faulty?

• Start with delay. Section 18 gives a delayed buyer two choices.
• Option one: withdraw from the project and take a full refund with interest.
• Option two: stay in the project and receive monthly interest until possession.
• State rules set the interest rate. It is usually the highest lending rate of the State Bank of India plus 2 percent.
• The Supreme Court strengthened this in the Newtech Promoters case of 2021. It held that the refund with interest is a right of the buyer who wants out.
• Now faults. Under Section 14(3), a builder is liable for structural defects for 5 years after possession.
• The builder must fix a reported defect within 30 days, free of charge.
• Builders who skip registration face a penalty of up to 10 percent of the estimated project cost.

5Where Can RERA Orders Be Challenged?

• A regulator’s order is not the last word. Each State must set up a Real Estate Appellate Tribunal, or REAT.
• It hears appeals against orders of the state RERA.
• Both buyers and builders can approach it if they disagree with an order.
• A fair second look makes the whole system more trusted.

6Where Does RERA Fall Short?

• A law is only as good as its enforcement. RERA shows this clearly.
• MahaRERA, Maharashtra’s regulator, had issued recovery warrants worth about ₹724 crore by mid-2025. Only about 32 percent had been recovered.
• In other words, winning an order and getting paid are two very different things.
• In February 2026, a Supreme Court bench led by the Chief Justice criticised how RERA works in practice.
• The bench said that, apart from helping defaulting builders, the institution was doing little. It also said the authorities had become a “rehabilitation centre” for retired officers.
• The Court asked why retired bureaucrats were so often appointed, and urged States to rethink the design of RERA.

7What Is in the News?

• On 4 September 2025, Housing Minister Manohar Lal launched the Unified RERA Portal.
• The portal aims to bring state RERA systems together. It also lets States share best practices.
• It gives buyers a single national platform to look up registered projects, promoters and agents.
• In January 2025, MahaRERA suspended the registration of about 1,950 projects. The builders had failed to meet disclosure duties after notices.
• MahaRERA also froze the bank accounts of those projects.

8What Should You Remember for Exams?

Must Know

• RERA is the Real Estate (Regulation and Development) Act, 2016.
• It is fully operative from 1 May 2017.
• Each State has its own authority.
• 70% of buyers’ money goes to escrow.

Good to Know

• Registration is needed above 500 sq m or 8 apartments.
• Flats are priced by carpet area.
• Defect liability is 5 years, with a 30-day fix.
• Section 18 gives refund or monthly interest.

Great to Know

• There is no single national authority (Trap).
• A delayed buyer is not limited to waiting (Trap).
• Appeals go to the Appellate Tribunal (Trap).