Introduction to Real Estate Regulation and Development Legislation

The real estate sector in India has shown exponential growth over the years. The sector has been affected by diverse legal regimes across states and opaque enforcement strategies by various state governments. Although being a significant contributor to the gross domestic product of the nation, the real estate suffers because of the irregularities that prevail in the real estate industry. This has resulted in a deficit of trust amongst buyers as well as investors. As India moves ahead in its growth journey, the need to regulate and instil transparency in the real estate sector becomes more important than ever.

The Real Estate (Regulation and Development) Act, 2016 establishes a Real Estate Regulatory Authority, commonly known as “RERA”, in each state for regulating the real estate sector in India. It came into force on May 1, 2016 and certain parts came into force on May 1, 2017. The idea of introducing legislation was an initiative of the Ministry of Housing and Urban Poverty Alleviation, Government of India (“MHUPA”) to boost domestic and foreign investment in the real estate sector.

The Real Estate (Regulation and Development) Act, 2016 seeks to protect home purchasers as well as help to boost investments in the real estate industry. It protects property buyers rights and imposes obligations on builders, resulting in greater transparency, accountability, and accountability in the real estate sector. The Real Estate Regulatory Authority also functions as an adjudicating body for speedy dispute resolution.

 A uniform and structured legal regime

The Real Estate (Regulation and Development) Act, 2016 has been framed as beneficial legislation in the real estate sector. Some of the key safeguards are as under:

• There has been clarity in interpretation and enforcement of the provisions because certain key terms, such as apartment, promoter, buyer, carpet area, and common areas with reference to the development of real estate projects, have been defined in the Real Estate (Regulation and Development) Act.
• One or more Real Estate Regulatory Authorities (“Regulators”) are required to be established in each state, and all real estate projects will be registered with the Regulators in whose jurisdiction the project is being developed.
• The promoter of a real estate project is required to create a page in relation to the proposed real estate project on the website of the regulator and enter all the details of the registration with the regulator.
• It was mandated that every state government shall establish an Appellate Tribunal to be known as the (Name of State and UTs)-Real Estate Appellate Tribunal within one year of the Real Estate (Regulation and Development) Act.

Significant provisions under the Real Estate (Regulation and Development) Act, 2016

• It is mandatory to register all projects of more than five hundred square metres.
• A minimum of 70% of the buyers’ and investors’ money will be kept in a separate account that can be used by builder only for construction and land related costs.
• Developers and builders cannot ask for more than 10% of the property’s cost as an advance payment before the sale agreement is signed.
• Builders are supposed to submit the original documents for all projects they undertake, and they are not authorised to make any changes to the plans without the consent of the buyer.
• The Real Estate (Regulation and Development) Act, 2016 mandate developers to sell properties based on carpet area and not super built-up area. In the event of a delay, buyers are entitled to get back the entire amount invested.
• The builder must rectify any issues faced by the buyer within 5 years of purchase. The issue must be rectified within 30 days of the complaint without charging any money.
• A builder cannot advertise, sell, build, invest, or book a plot without registering with the regulator.
• No civil court will have jurisdiction with respect to any matter that comes under the ambit of the Real Estate (Regulatory and Development) Act or the Appellate Tribunal.

 Evaluation of a better period: pre or post Real Estate (Regulation and Development) Act, 2016

Overall, the Real Estate (Regulation and Development) Act has been a boon to the Real Estate administration, making all the norms stricter. The industry has seen transparency more than before and also provides a good platform for home buyers to invest in their dream homes. It has brought discipline in the market for the parties, including the agents.

To refine the process, a few factors such as consistency in the Real Estate (Regulation and Development) Act across the country, modes of execution of orders and judgments, and application of the Act in different types of projects could be amended and expressly specified. 

It can be said that the Real Estate (Regulation and Development) Act is on the right track to meet the motive of speedy redressal of individual courts. There has been remarkable progress in less than a decade in this field.