Real Estate Regulation & Development Act – RERA FAQs

The Real Estate(Regulation and Development) Act, 2016, also called Real Estate Act or RERA, which is effective from May 1, 2017, aims to achieve certain duties and rights for allottees and, at the same time, defines duties, liabilities and penalties for builders/developers and brokers/intermediaries. The Act also mandates setting up a Real Estate Regulatory Authority in each state and Union Territory.

Listed below are a few frequently asked questions about this latest property Act that you need to know about.


The Act mandates developers to specify ‘carpet area’ rather than ‘super built up area’. How will that help?

The Act considers carpet area as net usable floor area of an apartment and it does not include common areas, balconies, verandahs, terraces, etc., while super built up area could be an addition of both. Therefore, it will become easier for buyers to compare projects and rates.


RERA is likely to increase paperwork and other formalities for developers. Will it lead to higher cost for home buyers?

The focus of the Act is in compliance and not pricing in the real estate sector. Primarily, the Act facilitates an environment that encourages single-window clearance system to fast-track real estate projects and make it easy to understand for customers. Hence, it would, by and large, depend on developers whether they will pass on the cost of the increase in formalities to buyers.


What are the guidelines to advertiser promote projects under RERA?

The Act clearly mentions that all marketing collaterals by the developers must be uploaded on the RERA site and anything shown in the marketing material needs to be in line with the final product or else real estate developer will be liable to penalties under the Act.


Is changing plan founder-construction project allowed?

Minor changes such as fixtures and fittings – but not changes in area or height –is allowed after the proper declaration by the developer and intimation to the buyer. In such cases, a certification by an architect/engineer is needed that such changes are required for structural reasons. Any change to sanctioned plans, layout plans, and specifications of buildings or common areas is subject to the consent of at least 2/3rd of consumers of the project.


According to the Act, what are the responsibilities of a buyer?

A buyer must make timely payments, including registration and all other charges, to the developer as per the agreement for sale. Once the OC (occupancy certificate) has been issued by the developer, the flat buyer is required to take possession within two months. It is compulsory for a consumer to exhibit active participation in the formation of an association, a cooperative society or any federation of consumers.


RERA mandates the developers to keep 70% of the funds collected from buyers in an escrow account. How will this help?

To ensure projects are completed on time, the Act requires the developers to maintain an escrow account for each ongoing project essentially under the purview of a bank or a lender. This will prevent the builder from using funds earmarked for a certain project for any other project. These funds deposited in the escrow account can be accessed by the developer in proportion to the progress of the said project.

The above information is sure to help you out in case of future property investments. Know more about the ACT here:

Last updated on August 1, 2017

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