What is RERA and How it Protects the Interest of Homebuyers?

9 min read • Published 8 November 2022
Written by Jatin Pareek
What is RERA and How it Protects the Interest of Homebuyers?

Does the fear of delayed project completions, construction quality, increasing interest rates etc deter you from making investments in development projects? Fret not! The Central government has established the Real Estate Regulatory Authority (“RERA”) through the Real Estate (Regulation and Development) Act (“Act”) , 2016. RERA aims to provide homebuyers with a quick dispute-resolution platform.

The Authority also has a duty to maintain accountability and transparency in the industry. RERA enables the sale of plots, apartments, buildings, and real estate projects, in an efficient and transparent manner in order to protect consumer’s interests.

RERA: Meaning and Significance  

To eliminate any inconsistency in the real estate industry, RERA was introduced. The Real Estate Regulatory Authority was established to protect home buyer’s rights and to escalate the growth of the real estate sector in a more efficient manner. As per the Act, the builders should inform the homebuyers about the construction progress, give them the property possessed by the specified date and adhere to every rule of the RERA for accountability.  The Act also directs the builder to register the land with RERA prior to putting it for sale, entertaining bookings or placing advertisements.  It has the following objectives:

  • Maintaining transparency, reducing the chances of fraud and prohibiting the routing of funds to some other project
  • Implementing pan-India standardization in the real-estate sector and ensuring professionalism
  • Making sure there is a flow of correct information between the home buyers and the sellers
  • Enhancing the reliability of the sector and increasing confidence among real-estate investors. 

Benefits Of RERA 

RERA offers the following benefits to buyers, promoters and real estate agents:

  • Carpet Area Standardisation: Previously, there was no standard method for calculating carpet area. RERA introduced a systematic formula for calculating carpet area. It defines carpet area as the net usable floor area of an apartment, excluding the area covered by external walls, areas under services shafts, exclusive balcony or verandah areas and exclusive open terrace areas.
    This prevents the promoters from falsely exaggerating the carpet area to raise the total price of the property.  
  • Reduction in Insolvency Risk of The Builder: Many developers and promoters work on multiple projects simultaneously. So, they used the funds of one project for another project. They later became bankrupt and were not able to complete the construction of the property.
    However, with RERA, 70% of funds accumulated need to be kept in a separate account and can only be withdrawn with the approval of a CA, architect or engineer.
  • Interest in Case of Any Delay: Before the implementation of RERA, the interest due on promoters in the event of delayed possession was far lower than that incurred by buyers in the event of delayed payments to promoters. However, under RERA if the builder fails to complete the project on the due date of completion then the buyer has the option-
    • To withdraw from the project subject to the non-availability of any other remedy and receive a full refund along with interest payable from the due date of completion till the amount is refunded.
    • To continue with the project and receive compensation along with interest payable from the due date of completion of the project till the project is actually completed.
  • Case of False Promise: The homebuyer will receive a complete return of their upfront payment if the builder does not deliver the property as promised. Further, if any structural defect or quality issues in workmanship, provision or service are discovered within 5 years of the possession of the property, the builder has to rectify it at no extra cost within 30 days. The aggrieved homebuyers are entitled to receive the appropriate compensation if the defect is not resolved in 30 Days.
  • Grievance Management: If the promoter, real estate agent, or buyer has any concerns or complaints about the project, they can file a complaint with RERA. If they are dissatisfied with RERA’s ruling, they can submit a complaint to the Appellate Tribunal. 

How RERA safeguards homebuyers interests? 

RERA protects homebuyers in several ways. Let’s understand them clearly:

  1. To begin, RERA requires builders to submit all project details on the RERA official website. 
  2. Along with revealing all project information, builders should keep updating the progress and any alterations made on a quarterly basis. This is required to ensure openness between the builder, the buyer, and the authority. Furthermore, the homebuyer should be provided with all relevant information regarding the house, such as layout, execution, and progress. This is their right to be informed.  
  3. According to RERA regulations, you (the buyer) are only required to pay for the carpet area and not the super built-up area. The Super built-up area includes extra spaces such as the lift, balcony, lobby, or staircase. 
  4. As previously stated, builders must keep 70% of the money of a specific project in a separate account. They cannot utilise these funds for other projects. This ensures that the funds are used only for the purpose for which they are raised and not for other reasons 
  5. RERA makes every effort to ensure projects are completed on schedule. If there is a delay in the project, the builder will be required to pay interest on the sum put in by the homebuyers. 
  6. RERA gives developers a timeline to address any concerns with buyers, and developers must adhere to this timeline for dispute resolution. 
  7. The developer cannot make any changes to the building plan (additions or reductions) without the consent of two-thirds of the total number of owners. If a majority of the owners do not agree, the modification cannot be implemented. Provided this the promoter may make minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorised Architect or Engineer after proper declaration and intimation to the allottee.
  8. According to the RERA, builders may not charge homebuyers more than 10% of the total cost of the property as an advance. 
  9. When you own a property and discover mistakes in the title deed, you can immediately seek compensation from the developer. 

Filing complaint under RERA 

The buyer, promoter, or builder can register a complaint under RERA by completing the following steps: 

Step 1: Find a RERA lawyer for yourself and then file your complaint in the appropriate jurisdiction. 

Step 2: You should submit the complaint as per the norms and regulations of the jurisdiction where the property is located. 

Step 3: Include your (applicant) as well as the respondent’s details. Respondent’s details can be taken from the RERA website for the RERA registered builders

Step 4: Include the project’s address along with the RERA registration number. 

Step 5: Include a synopsis of the complaint’s reasoning and the claim’s grounds. 

Step 6: If you have sought relief, mention them in detail

Step 7: Pay the requisite complaint fee. The fee varies from state to state. 

Another alternative is to file a complaint online through the relevant state’s RERA website. If you are dissatisfied with RERA’s ruling in your case, you can appeal to the Appellate Tribunal. If you are dissatisfied with the Appellate Tribunal’s judgement, you can appeal to the High Court for a better resolution of your problem. 

What are the Penalties Under RERA?

Penalty for Promoters or Builders

For the complaint that you may have registered with the RERA as a homebuyer, the promoter or builder will face these penalties based on the offence mentioned:

  • The promoter is liable to pay 10% of the estimated project cost, if the project is not registered under RERA. They must also pay 5% of the estimated project cost if they furnish inaccurate or misleading information about the project. 
  • If the agents build and sell their projects before RERA registration, the penalty is Rs 10,000 per day or 5% of the project cost. 
  • It might be mandatory for the developers to pay a daily fine of up to 5% of the project’s estimated value if there is any severe RERA non-compliance. 
  • If there is any non-compliance with the Appellate Tribunal, the penalty may include up to three years in jail, a fine equal to 10% of the project’s estimated cost, or sometimes both. 

Penalty for Homebuyers

The following are the penalties that homebuyers face if they do not comply: 

  • If buyers fail to comply with RERA, they will be subject to a daily penalty of 5% of the estimated cost of the project. 
  • If a buyer fails to comply with the Appellate Tribunal, they will be imprisoned for a term that may extend up to one year and/or will be fined 10% of the estimated cost of the project. 


This article aimed to provide you with a thorough understanding of how RERA works and how you may utilise it to safeguard yourself as a homebuyer. You may also be aware that there are significant consequences for failing to comply with RERA. 

If an area of the development is more than 8 units or 500 square metres, the builders must register it with RERA before advertising and launching it. The builders must obtain all the required licences for property advertising. As a responsible homebuyer, you must check that your selected property is RERA-registered to avoid future complications. 

Frequently Asked Questions (FAQs)

What is the duration or validity of a Real Estate Regulatory Authority (RERA) registration?

The registration will be valid for the duration of the project or phase as specified by the builder or developer.

What if a builder or developer does not deliver within the validity period?

The validity of the registration is determined as per the builder’s calculations. As a result, they bear responsibility for adhering to the deadlines; otherwise, they risk incurring losses or being penalised.

Does filing a complaint require a lawyer?

It is not mandatory to have a lawyer, but it would be helpful to have one.

Who are the primary beneficiaries under RERA?

Homebuyers and the real estate industry benefit the most from RERA.

Was this helpful?

Jatin Pareek

Investment Associate
Jatin is an Investment Professional in the making with expanding expertise in the debt and equity markets. He has completed his Bachelor of Technology in Civil Engineering from the Manipal Institute of Technology. He has helped build Wint Wealth in various capacities ranging from being a member of the Investor Relations Team to contributing actively at the Founder's Office. He has been an integral part of the Assets Team for about a year now.

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