The Real Estate Regulatory Authority (RERA) was established in 2016 as part of the Real Estate (Regulation and Development) Act to bring transparency, accountability, and standardization to India’s real estate sector. It plays a critical role in preventing fraud, protecting the interests of homebuyers, and ensuring fair practices in the industry. Before RERA, the real estate market was highly unregulated, leading to numerous scams, delayed projects, and issues with transparency. Here’s how RERA has changed the landscape and helps prevent real estate scams in India.
1. Transparency in Real Estate Projects
One of the primary objectives of RERA is to bring greater transparency to real estate transactions. Under RERA, developers are required to provide accurate information about project details, including timelines, floor plans, land ownership status, and legal approvals. This allows buyers to make informed decisions and prevents developers from making false claims or misleading buyers with exaggerated promises.
For every real estate project, developers must upload project information on the RERA website, which is accessible to the public. Buyers can now verify the project’s registration status, legal approvals, and ongoing progress.
2. Ensuring Timely Delivery of Projects
Before RERA, project delays were one of the biggest complaints from homebuyers. Developers would often take payments from buyers but fail to complete the project on time, leaving buyers stuck with incomplete homes and additional costs. RERA has addressed this issue by making timely delivery mandatory.
Under RERA, developers are required to provide a clear timeline for project completion. If they fail to meet the deadline, they are liable to pay compensation to the buyers. This provision protects buyers from long delays and holds developers accountable for project timelines.
3. Protection Against Financial Misuse
In many cases, developers would divert funds collected for one project to another, leading to delays and financial mismanagement. RERA combats this by enforcing strict financial regulations. Under RERA, 70% of the funds collected from buyers must be kept in an escrow account and used exclusively for the construction of the project. This prevents developers from misusing funds and ensures that the money is spent on the project for which it was intended.
4. Fair Agreements Between Buyers and Developers
RERA mandates that developers must use a standard sale agreement, which outlines the terms and conditions of the transaction. This agreement protects buyers from unfair terms that favor developers. The sale agreement must include clear details about the project, possession date, payment structure, and compensation in case of delays or defects. This prevents developers from imposing hidden charges or changing terms unilaterally.
5. Redressal Mechanism for Buyers
RERA provides an efficient grievance redressal system for homebuyers. Buyers can file complaints against developers for violations such as project delays, poor construction quality, or failure to deliver as promised. RERA tribunals have been set up in each state to resolve disputes in a timely manner.
The authority can take strict action against developers, including imposing penalties, revoking registration, or ordering compensation to buyers. This has empowered homebuyers and reduced the risk of exploitation.
6. Reducing the Risk of Fraudulent Developers
One of the most significant impacts of RERA is reducing the number of fraudulent developers in the market. To register a project under RERA, developers must submit detailed information about their background, track record, financials, and land ownership. Developers with a history of fraud or legal disputes are likely to be denied registration.
Unregistered projects are not allowed to advertise, sell, or accept bookings. Buyers are also advised to check the RERA registration status of a project before making any investment. This has drastically reduced the occurrence of scams involving fake or unapproved projects.
Conclusion
RERA has brought much-needed reform to India’s real estate sector, protecting homebuyers from fraud, delays, and unfair practices. By enforcing transparency, accountability, and standardized processes, RERA has built trust in the real estate market and reduced the number of scams. Buyers now have a safer, more structured environment to invest in properties and can make informed decisions backed by legal safeguards.