The Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to bring transparency, accountability, and efficiency into the real estate sector. It aims to protect homebuyers while ensuring a fair and transparent environment for real estate transactions. Prior to RERA, the real estate industry was largely unregulated, which often led to delays, unfair practices, and financial losses for homebuyers. Here’s how RERA has impacted the real estate sector's transparency and accountability: 1. Mandatory Registration of Projects Under RERA, every real estate project (residential or commercial) exceeding a certain size must be registered with the Real Estate Regulatory Authority of the respective state before any advertisement, marketing, or sale can take place. Developers must submit detailed information about the project, including the project’s timeline, layout, land title, approvals, and financial plan. This information is then made publicly available on the RERA website. This mandatory registration ensures that buyers have access to all key details of the project, which enhances transparency and reduces the risk of fraudulent practices. 2. Detailed Project Information for Buyers RERA mandates developers to provide detailed information on the project, such as: Project layout and timeline Legal title of the land Approvals from various government authorities Specifications of apartments (carpet area, amenities, etc.) This gives potential buyers a clear and accurate picture of what they are investing in, thereby preventing misleading advertisements and false promises. 3. Carpet Area Standardization Prior to RERA, builders would often market properties based on super built-up area, which included common areas like lobbies and staircases, leading to a reduced actual usable area for buyers. RERA standardizes the definition of carpet area as the area within the walls, excluding balconies and common areas. Builders can no longer charge buyers based on super built-up area, making property prices more transparent. 4. Escrow Accounts for Construction Funds One of the biggest sources of delays in real estate projects was the diversion of funds by developers to other projects or purposes. RERA mandates that 70% of the funds collected from buyers must be deposited in an escrow account, which can only be used for the project’s construction and land costs. This prevents misappropriation of funds and ensures that the money is used for its intended purpose, thereby reducing delays. 5. Timely Project Delivery and Penalties for Delays Delays in project delivery were a significant issue before RERA. Developers would often miss deadlines, leaving buyers stuck in long-term financial commitments without possession of their homes. Under RERA, developers must specify a completion date at the time of project registration and are held legally accountable to meet this deadline. If a developer fails to deliver the project on time, they are liable to pay penalties and compensation to the homebuyers. Buyers have the right to withdraw from the project and seek a full refund, or they can choose to stay invested and receive compensation for the delay. 6. Five-Year Defect Liability RERA holds developers responsible for structural defects, poor workmanship, and quality issues for five years after the handover of the property. If any defect is found during this period, the builder is required to fix the issue within 30 days, failing which they are liable to pay compensation to the buyer. This provision enhances accountability for developers regarding the quality of construction. 7. Buyers' Rights and Legal Remedies RERA empowers homebuyers by providing them with clear legal remedies in case of disputes. Buyers can approach the Real Estate Regulatory Authority or the Appellate Tribunal for the redressal of their grievances. These bodies are designed to resolve disputes in a timely manner. In case of a violation of RERA provisions, the developer can face penalties, imprisonment, or both, depending on the nature of the offense. 8. Regulation of Real Estate Agents Real estate agents must also register with RERA to be involved in the sale or purchase of properties in registered projects. This step ensures that only authorized agents participate in transactions, which curbs fraudulent practices and ensures accountability in the real estate brokering industry. 9. Continuous Monitoring and Updates Developers are required to update the status of their projects regularly on the RERA website. Buyers can track the progress of construction and approvals, ensuring transparency throughout the construction phase. This reduces information asymmetry and helps buyers stay informed about any potential delays or issues with the project. 10. Faster Dispute Resolution Mechanism RERA establishes a fast-track dispute resolution mechanism through the formation of a Real Estate Appellate Tribunal in each state. This tribunal is required to dispose of complaints within 60 days, providing an efficient and speedy remedy to buyers facing issues with their developers. 11. Impact on Developers RERA has placed significant obligations on developers, which has led to better project planning and execution. Developers are now more cautious about starting new projects without obtaining the necessary approvals. While it has increased compliance costs for developers, it has also improved the overall credibility of the real estate sector, attracting more investment, particularly from institutional investors. Key Benefits of RERA: Increased transparency through the disclosure of project details and timelines. Accountability of developers to adhere to timelines and project specifications. Protection of homebuyers from fraudulent practices, delays, and misrepresentation. Improved confidence in the real estate sector, leading to increased investments. Challenges with RERA: While RERA has been implemented in most states, the level of enforcement varies across different regions. Some states have diluted the central law's provisions, creating loopholes that may be exploited by developers. There is still a need for greater awareness among homebuyers about their rights under RERA. Conclusion: RERA has fundamentally transformed the real estate sector by bringing in much-needed transparency and accountability. It has established a legal framework that protects the interests of homebuyers while making developers more responsible and accountable for project completion and quality. Despite some challenges in its implementation, RERA has made real estate transactions more transparent, fair, and consumer-friendly.