What is RERA Full Form? Understanding RERA Act, 2016
Team MoneyTree
Posted on - 10 July, 2024
Real Estate Regulation and Development Act, 2016 - An Overview
The Indian Parliament passed the Real Estate (Regulation and Development) Act 2016 to streamline the blooming real estate industry and make the property buying and selling process smooth, transparent and integral. The purpose of the RERA Act is to uphold the rights and liabilities of buyers and builders across all states of the country. The RERA Act is effective on and from 1 May, 2016 and comprises 10 chapters which are further classified into 92 provisions, of which 52 were notified at that time and the rest were effective on and from 1 May, 2017.
Need for Regulatory in the Real Estate Sector
The Real Estate Sector in India is growing at a significant pace and emerging as a prominent source of wealth creation for people looking to invest their money with a goal of high rate of investment. Currently, the real estate industry in India contributes about 8.53% of total GDP.
With a growth rate of about 30%, India’s real estate market has witnessed emerging state-of-the-art commercial and residential properties from the most sought-after builders across the nation like Godrej Properties, L&T Realty, M3M Group, DLF Limited, ACE Group etc.
RERA Act drafted out a proper policy and regulation for this blooming real estate sector and to enhance real estate investments that prompt a large group of people to buy property for sale under a regulation policy that protects their rights and interests.
What is the RERA Act?
Real estate sector in India has been the crucial pillar of the economy and is the source of wealth creation and earning for a large population of India. Although, it was widely unregulated.
In order to regulate the real estate sector and bring professionalism and standardisation across the country, the parliament enacted RERA Act, effective on and from 1 May, 2016.
RERA Act is a real estate regulation policy containing 92 provisions which aims to uphold the consumer rights and interest of the buyers and brings uniformity and standardised business practises across every real estate project in the country. It set transparency, integrity, and accountability in the real estate business and enabled a fast-track mechanism for the resolution of disputes.
RERA Full Form and its Analysis
RERA stands for Real Estate Regulatory Authority, a regulatory body that came with the enactment of RERA Act, 2016 and protects the rights and interests of buyers and builders by bringing uniform and standard practices in the real estate sector across the country. The Real Estate Regulatory Authority regulates both commercial and residential properties in accordance with the laws presented in the Real Estate (Regulation and Development) Act, 2016.
Objectives of the RERA Act, 2016 are:
- Bringing transparency
- Introducing uniform and standardised real estate practices
- Infusing professionalism in the real estate business across the country
- Ensuring accountability and integrity
- Allowing a symmetrical flow of information between buyers and builders
- Establishing a regulatory body to oversee a seamless mechanism
- Introducing a fast-track mechanism for disputes resolution
- Bringing confidence to the sector and prompting people to buy property for sale.
What is RERA Approved?
RERA approved is a layman term for a real estate project that has acquired the mandatory papers and approval from the state real estate regulatory to build a property for sale.
The term ‘RERA Approved’ is often used by builders and channel partners in real estate in their sales and marketing strategies.
RERA registered or RERA Certified is an official term used to denote a property for sale that is registered under the state’s real estate regulatory authority. After the enactment of the RERA Act, 2016, each builder with an area of property more than 500 sq m, needs to register that property under the state's RERA before starting marketing the real estate project.
‘RERA approved’ and ‘RERA registered’ are often used interchangeably in day-to-day usage but in fact they are different terms. It is advised to buyers to do due diligence and analyse the project details on the official RERA website before making a real estate investment.
Chronology of Events leading to the RERA Act, 2016
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May, 2008
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First time Concept Paper on real estate regulations by Ministry of HUPA
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2011
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A central law suggested by the Ministry of Housing for the real estate sector
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June, 2013
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Approval of Real Estate Bill, 2013 by the Union Cabinet
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August, 2013
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Real Estate Bill was introduced in the Rajya Sabha
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February, 2014
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Standing Committee was laid for amendments
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April, 2015
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Approval of amendments by the Union Cabinet
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December, 2015
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Real Estate Bill, 2015 approved by the Union Cabinet after incorporating amendments and making modifications
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10 March, 2016
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Real Estate(Regulation and Development) Act, 2016 passed by Rajya Sabha
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15 March, 2016
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RERA Act, 2016 passed by Lok Sabha
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25 March, 2016
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President assent the RERA Act, 2016
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Key Points Under the RERA Act, 2016
Real Estate (Regulation and Development) Act, 2016 brings uniformity in real estate practices across the country and assures a transparent and seamless experience for buyers and builders in the process of buying and selling real estate projects.
Crucial key points under the RERA Act, 2016 include:
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Enhanced Security:
The provisions under the RERA Act instruct to keep 70% of the investors’ and buyers’ money in a separate account, which would then be allotted to the builder for construction and land related costs. It restricts builders not to ask more than 10% of the property’s cost as an advance payment before signing the sale agreement.
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Clear Transparency:
While applying for RERA registration, builders are required to submit original documents for their real estate projects and undertakings. The RERA Act restricts builders not to make changes to the property plans, without the prior consent of the buyers.
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Unbiased Fairness:
The RERA Act laid out definitions of important terms like ‘Carpet Area’, 'Common Areas’, ‘Apartment’, ‘Building’ etc and brought in uniformity and fairness in real estate business practices. It instructed builders to sell and promote properties based on the ‘carpet area’ and not the ‘super built-up area’. It titled investors to get the entire money invested, in case a project has been delayed.
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Superior Quality:
The provisions in the RERA Act mandated builders to rectify and make amends to the issues and challenges faced by the buyer in the first 5 years of purchase. It instructed builders to rectify the issues raised within 30 days of the complaint.
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Reliable Authorisation:
The provisions in the REAR act restrict regulators not to market, sell, build, invest, or book a plot without registering it with the state’s RERA. It mandates builders and promoters/channel partners to bear the unique project-wise REAR registration number while marketing and selling real estate projects.
How do I make sure that a property is RERA compliant?
The main points to consider before understanding if a property is RERA Compliant are:
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If the area of the property is more than 500 sq metres, the builder must register it under the state real estate regulatory.
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The builder must provide the original documents to get approval from the RERA, containing information regarding the property sanctioned plan and its brief details, enterprises’ brief details, and authenticated certificates.
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RERA Act instructed builders to provide proof that 70% of investors’ and buyers’ money is deposited in a discreet bank account and could only be used for construction and land-related purposes.
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Builders are mandated to obtain a unique project-wise RERA registration number before marketing and selling their real estate projects.
How does the RERA Act benefit Real Estate Business?
According to the IBEF Report, the real estate industry in India, which is about to be around Rs. 12,000 Cr (US$ 1.72 billion) in the financial year 2019, is estimated to grow to Rs. 65,000 Cr. (US$ 9.30 billion). The report further estimated that the real estate market size in India will reach $1 trillion by 2030.
RERA Act, 2016 brought about revolutionary changes in the real estate industry in India by channelising it and streamlining the responsibilities and liabilities of buyers and builders which consequently lead to a seamless buying and selling experience in the real estate business.
Key benefits of the RERA Act include:
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Consistent Carpet Area:
The provisions in the RERA Act set the standard definition of ‘Carpet Area’ across every real estate project. It restricted promoters to asking for increased prices based on inflated carpet areas.
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Builder’s Security against Insolvency:
RERA Act instructed builders to maintain a discreet account that contains 70% of the investors’ and buyers’ money and could only be used for construction and land-related of that particular project. Unlike earlier, builders are not allowed to move funds collected from one real estate project to another.
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Upfront Payment Clarity:
The provisions in the RERA Act restrict builders to asking for more than 10% of the property value before signing the sale agreement. It gives relaxation to buyers from having to fund huge amounts of money while making a real estate investment.
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Protection against any Defect:
The RERA Act instructs builders to rectify issues faced by buyers in the first 5 years of possession of the property.
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Interest Compensation:
The provisions in the RERA Act enable the same amount of interest to be paid by both the parties, buyers and builders, in case of delayed payment and delayed possession, respectively.
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Safeguards against False Promises:
The RERA Act restricts builders to make changes to real estate project sanctioned plans before the prior consent of the buyers. In case of any discrepancies in the project built and what was promised, the law entitles buyers to a full repayment of the advance money paid.
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Compensation Rights:
If the buyer finds any discrepancy in the title of the property after taking its possessions, the RERA Act enables the buyer to claim for compensation from the promoters/builders.
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Right to Information:
The RERA Act mandates the right of buyers to know all the information regarding a particular project such as its design layout and plans, completion status etc in accordance with the RTI Act.
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Easy Grievance Redressal:
The RERA Act enables buyers, agents, and promoters to file complaints against a particular real estate project to RERA. The RERA Act brings in a fast-track and streamlined mechanism for dispute resolution.
Changes in the Real Estate Business after RERA Act, 2016
The Real Estate (Regulation and Development) Act, 2016 changed the contours of the real estate industry and brought about revolutionary changes, like transparency, integrity and accountability. It streamlined the real estate sector by upholding the rights and interests of buyers and builders with uniform and standardised real estate business practices across the country.
RERA Act, 2016 changed the dynamics of the real estate business bringing professional and standardised property buying and selling experience across the country.
Crucial changes in the real estate sector after the RERA Act, 2016 include:
For Real Estate Builders
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It mandates promoters to provide the necessary documents before advertising a project.
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It restricted builders to collecting 70% of the amount invested in a separate account.
For Real Estate Builders
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It mandates promoters/agents to use a unique RERA registration number while marketing a property for sale.
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It exercises the right to information regarding any real estate project, like its design layout, architecture plan, completion status, etc.
For Real Estate Builders
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It ensures the same amount of interest in case of delayed payment and delayed completion of the project.
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It features a smooth and fast mechanism for resolution of any raised dispute.
Looking for RERA Approved Projects: Check RERA Website!
The RERA Act makes it mandatory for builders to obtain an unique project-wise RERA registration number which is available on the state’s RERA website.
Here, we list state-wise list of the RERA website:
How MoneyTree Realty is Channelising the Real Estate Sector?
MoneyTree Realty is the Top Channel Partner in Real Estate and features a diverse portfolio of commercial and residential properties across the country from leading real estate developers like DLF Limited, M3M Group, Elan Group, Godrej Properties, Paras Buildtech, etc.
Under the leadership of Mr. Sachin Arora, real estate consultants at MoneyTree Realty continuously strive to provide top-notch consultations and valuable insights into market trends and help you make a strategic and promising real estate investment.
Services Offered by MoneyTree Realty include:
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Follows a Client-Centric Approach
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Best-in-class Property Consultations
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Maintain Transparency while you buy a Property for Sale
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Provides Data-backed Analytics on Property/Market Trends
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Upholds Integrity and Accountability
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Maintain Ethical Standards and Professionalism
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Are you tired of looking at properties for sale?
Real estate consultants at MoneyTree Realty provide a diverse portfolio of commercial and residential properties from leading real estate developers in India.
We provide best-in-class property consultations while maintaining a client-centric approach and helping you buy property for sale at best market prices along with other exciting deals and offers.
To buy the property of your dream and make a strategic investment, reach out to us on
+91 973200007
.
FAQs
What is the purpose of the RERA Act?
RERA Act, 2016, consisting of 92 provisions, brings uniformity and standardised regulation in the real estate sector across the country. It brings transparency, integrity and accountability between buyers and promoters across all states.
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What does it mean if RERA approved?
‘RERA Approved’ is often used by the builders during the marketing and selling of a project and means acquiring the mandatory approvals from the state’s regulatory bodies.
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What is the benefit of RERA?
RERA Act, 2016 brings revolutionary changes in the real estate sector by incorporating professional and uniform business practices across every real estate project in the country. It upholds the rights and interests of buyers and promoters.
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Why is RERA Certificate important?
Approval from the state’s regulatory bodies for the RERA Certificate ensures transparency, integrity, and accountability and maintains top-notch quality and standards in the real estate project.
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What is RERA in simple words?
RERA is the acronym for Real Estate Regulatory Authority, an authoritative body that came into existence after the enactment of RERA Act, 2019. RERA continuously strives to maintain regulated uniformity and professionalism in the real estate sector across the country.
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