RERA and its impact on the property market

The Real Estate (Regulation and Development) Act, is brought into fruition to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector. Consequently, the Act further augments the aspirations of home buyers by ensuring the sale of plots, apartments or buildings in an efficient and transparent manner. Hence, it can be safely said that the RERA seeks to safeguard the interests of home buyers, users who plan on taking a home loan, along with also boosting the investments in the real estate sector. The RERA Act is also beneficial for the industry as it ensures a safe cover right from launch of the projects and even makes developers accountable for post-sales issues.

The projects which come under RERA are:

  • Residential and commercial projects
  • Land is over 500 sq. mts. or 8 apartments
  • 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


Benefits of RERA for the real estate industry include:

  • Better governance and enhanced transparency
  • Significantly improved project efficiency
  • A robust and fully developed project delivery
  • Standardisation and quality
  • Facilitating improved confidence of investors
  • Attract higher and quality investments thus ensuring overall smoother PE funding
  • Regulated environment


Some Points under Real Estate Regulation and Development (RERA):

  • Transparency - From submitting the original documents for all projects undertaken to not making changes in plan without the consent of buyer, the RERA Act ensures complete transparency in all projects
  • Secure - As per the RERA Act, a minimum of 70% of the buyers’ and investors’ money will be kept in a separate account. This amount, can be withdrawn only on the basis of completion of project. Furthermore, the developers and builders cannot charge more than 10% of the property’s cost as an advance payment before the sale agreement is signed
  • Trust - With the implementation of RERA, the developers are now instructed to sell properties based on standardized definition of Carpet Area. Additionally, if the project is delayed, home buyers are entitled to get back the entire money invested or they can choose to be invested and receive compensation along with interest payable from the due date of completion of project till the project is actually completed
  • Authorisation - A regulator cannot advertise, sell, build, invest, or book a plot without registering with the regulator. After registration, all the advertisements for investments should bear a unique project wise registration number provided by RERA. 

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.