Impact of RERA on brokers and builders in India

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What is RERA? 

RERA- The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament. The RERA seeks to protect the interests of home buyers and also boost investments in the real estate sector. 

The Rajya Sabha passed the RERA bill on March 10, 2016, followed by the Lok Sabha on March 15, 2016 and it came into force from May 1, 2016. 

59 of its 92 sections were notified on May 1, 2016 and the remaining provisions came into force from May 1, 2017. 

Under the Act, the central and state governments are required to notify their own rules under the Act, six months, on the basis of the model rules framed under the central Act.


Because home buyers have complained that real estate transactions were heavily in favour of the developers. 

RERA and the government’s model code, aim to create a more equitable and fair transaction between the seller and the buyer of properties, especially in the primary market. 

RERA, it is hoped, will make real estate purchase simpler, by bringing in better accountability and transparency.

Number of RERA Registered brokers in India

State RERA Projects RERA Brokers
Andhra Pradesh 731 95
Arunachal Pradesh No Info No Info
Assam 146 13
Bihar 874 280
Chhattisgarh 1109 463
Goa 533 186
Gujrat 6764 1112
Haryana 753 1857
Himachal Pradesh 53 42
Jharkhand 178 4
Karnataka 3298 1846
Kerala 13 31
Madhya Pradesh 2543 666
Maharashtra 24437 23170
Manipur  No Info No Info
Meghalaya No Info No Info
Mizoram No Info No Info
Nagaland No Info No Info
Orissa 354 54
Punjab 854 1950
Rajasthan 1184 1396
Sikkim  No Info No Info
Tamil Nadu 1452 1111
Telangana 1722 1094
Tripura 06 No Info
Uttar Pradesh 2785 3650
Uttrakhand 269 292
West Bengal No Info No Info
Andaman & Nicobar Islands 1 21
Chandigarh 3 14
Daman & Diu 111 2
Delhi 21 217
Jammu & Kashmir No Info No Info
Ladakh No Info No Info
Lakshadweep No Info No Info
Puducherry 42 2
Total 50,236 39,568

In India, 50,236 Real Estate Projects and 39,568 Real Estate Agents have registered under RERA.

How RERA is helping home buyers?

  1. Informing allottees about any minor addition or alteration.
  2. Need consent of 2/3rd allottees about any other addition or alteration.
  3. Can’t launch or advertise before registration with RERA
  4. Need Consent of 2/3rd allottees for transferring majority rights to 3rd party.
  5. Sharing information project plan, layout, government approvals, land title status, sub-contractors.
  6. Increased assertion on the timely completion of projects and delivery to the consumer.
  7. An increase in the quality of construction due to a defect liability period of five years.

What is the RERA definition of carpet area?

The area of a property is often calculated in three different ways – carpet area, built-up area and super built-up area

Hence, when it comes to buying a property, this can lead to a lot of disconnect, between what you pay and what you actually get. 

Gautam Chatterjee, Maharashtra RERA chairman, explains that “It is now mandatory for the developers of all ongoing projects, to disclose the size of their apartments, on the basis of carpet area (i.e., the area within four walls). This includes usable spaces, like kitchen and toilets. This imparts clarity, which was not the case earlier.” 

According to the RERA, carpet area is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

What is the impact of RERA in the Real Estate industry?

  1. Increased project cost.
  2. Tight liquidity.
  3. Rise in cost of capital.
  4. Increase in project launch time.

Initially, a lot of work is to be done to get the existing and new project registered. Details such as status of each project executed in the last 5 years, promoter details, detailed execution plans, etc., needs to be prepared. 

With the advent of RERA, specialised forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal, will be established for the resolution of disputes pertaining to home buying and the aggrieved party will have no recourse to other consumer forums and civil courts, on such matters.

What type of projects come under RERA?

  1. Commercial and residential projects including plotted development.
  2. Projects measuring more than 500 sq mts or 8 units.
  3. Projects without Completion Certificate, before commencement of the Act.
  4. The project is only for the purpose of renovation / repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, does not come under RERA.
  5. Each phase is to be treated as a standalone real estate project requiring fresh registration.

Is it necessary to have RERA number for builders?

Yes it is important for builders/ developers. They need to do the following things.

  1. Project registration.
  2. Advertisement.
  3. Withdrawal – POC method.
  4. Website updation/ Disclosures.
  5. Carpet area.
  6. Alteration in project – approval of 2/3 allottees.
  7. Project accounts – Audit.
  8. 70% of the funds collected from allottees needs to be deposited in the project account. Withdrawals to cover construction and land cost.
  9. Withdrawals to be in proportion to the percentage completion method.
  10. Withdrawal to be certified by an engineer, architect, and CA.
  11. Provision for RERA to freeze project bank accounts upon non-compliance.
  12. Interest on delay will be the same for customer and promoter.

What information does a builder need to provide under RERA?

  1. Number, type and carpet area of apartments.
  2. Consent from affected allottees for any major addition or alteration.
  3. Quarterly updating of RERA website with details such as unsold inventory and pending approvals.
  4. Project completion time frame.
  5. No false statements or commitments in advertisement.
  6. No arbitrary cancellation of units by the promoter

How does RERA impact Real Estate brokers/ agents/ consultants?

Under the Real Estate (Regulation and Development) Act (RERA), real estate agents will need to register themselves, to be able to facilitate a transaction. The broker segment in India, is estimated to be a USD 4 billion industry, with an estimated 5,00,000 to 9,00,000 brokers.

However, it has traditionally been unorganised and unregulated. It brings a lot of accountability in the industry and the ones who believe in professional and transparent business, will reap all the benefits. 

With RERA in force, brokers cannot promise any amenities or services that are not mentioned in the documents. Moreover, they will have to provide all information and documents to the home buyers, at the time of booking. 

Consequently, RERA is likely to filter out the inexperienced, unprofessional, fly-by-night operators, as brokers not following the guidelines will face hefty penalty or jail or both.

Is it necessary to have RERA number for brokers/ agents?

According to Section 3: 

  • Promoter cannot advertise, book, sell or offer for sale, without registration with RERA.

According to Section 9:

  • No agent can sell any project without obtaining RERA registration.
  • Agents’ RERA number needs to be documented in every sale facilitated by him.
  • Registration needs to be renewed.
  • Registration can be revoked or blocked if any breach is made to conditions of registration for a specified time.

According to Section 10:

  • No agent can sell a project not registered.
  • Maintain books and records.
  • Not be involved in unfair trade practices.
  • Make an incorrect statement – oral, written, visual.
  • Represent that services are of a particular standard.
  • Represent that the promoter or himself has approval or affiliation which such promoter or himself does not have.
  • Permit publication of advertisement in the newspaper or otherwise of services not intended to be offered.
  • Agent needs to facilitate possession of all documents to the allottee at the time of booking.


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