By Hrithika Shetty, Advocate
How the Real Estate (Regulation and Development) Act, 2016, sought to strengthen transparency, accountability and homebuyer protection in India.
The 36-Month Promise
In 2014, my uncle booked a 2 BHK apartment on the outskirts of Bengaluru. I was still in school, but I remember accompanying him to the sales office. Everything was designed to create the perfect first impression. There was a model apartment, coffee for visitors and a salesperson confidently assuring prospective buyers that possession would be delivered within “36 months, maximum.”
The assurance sounded convincing. Nobody in the room thought to ask the obvious question: What happens if the promised deadline is not met?
Five years later, the apartment was still incomplete. The builder had stopped responding to calls, and my uncle was paying rent for the home he lived in while continuing to pay EMIs for the home he was waiting to receive. At every family gathering, the same question would arise: “Any update from the builder?”
The answer remained unchanged.
For many homebuyers in India, delayed possession, uncertainty over project completion and difficulties in obtaining clear answers from developers have been familiar concerns. Purchasing a home often represents years of savings and financial commitment. When a project remains incomplete beyond its promised timeline, the consequences extend far beyond inconvenience.
This is one of the concerns that the Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, sought to address.
RERA: A Turning Point
I used to think that was just how real estate worked in India. You save for fifteen years, hand your money to a builder and hope for the best. It turns out that a law was introduced to address these concerns.
RERA, the Real Estate (Regulation and Development) Act, 2016, came into force in stages, with its key provisions taking effect on different dates. Honestly, many people still do not know what it actually does beyond thinking of it as “some builder rule.” So, here is what matters, explained without complicated legal language.
KNOW WHAT YOU PAY FOR
Builders often advertised apartments based on the “super built-up area,” which could include a proportionate share of common areas such as the lobby, lift and stairwell. This sometimes made it difficult for buyers to understand how much usable space they were actually getting.
RERA requires the carpet area of an apartment to be disclosed, helping buyers understand the actual usable floor area within their homes. In simple terms, a 1,200 sq. ft. apartment advertised on the basis of super built-up area may have a much smaller carpet area. With greater transparency in area disclosure, buyers can make more informed comparisons before purchasing a property.
PROJECT FUNDS AND FINANCIAL ACCOUNTABILITY
Before RERA, homebuyers often had limited visibility into how the money collected by a builder was being utilised. Funds collected for one project could potentially be diverted to another, leaving buyers waiting for their homes while construction remained incomplete.
Under Section 4(2)(l)(D) of RERA, 70% of the amounts realised from allottees for a registered project must be deposited in a separate bank account maintained for that project. These funds are intended to cover the land cost and construction cost of the same project, and withdrawals are subject to prescribed legal requirements and certifications.
This provision aims to ensure greater accountability in the use of project funds and reduce the risk of money being diverted to other projects. While it cannot guarantee that every project will be completed on time, it provides an important financial safeguard for homebuyers.
THE PENALTY CLOCK RUNS BOTH WAYS
Miss an EMI payment by a week, and a homebuyer may face interest charges under the applicable loan agreement. But when a builder misses a three-year deadline, buyers may be left waiting for their homes without a clear resolution.
Under RERA, the applicable interest rate for delayed payments by the allottee and delayed possession by the promoter is governed by the relevant state rules. The law provides a framework for holding both parties accountable. For homebuyers who have faced delayed possession, this represents an important statutory protection.
FIVE YEARS OF PROTECTION AGAINST DEFECTS
Homebuyers are entitled to five years of protection against certain defects under RERA. Structural cracks, seepage and other defects relating to workmanship, quality or services may fall within this provision if they are brought to the promoter’s notice within five years from the date of handing over possession. Under Section 14(3) of RERA, the promoter is required to rectify such defects without further charge within 30 days. Failure to do so may entitle the allottee to appropriate compensation under the Act.
THE REALITY ON THE GROUND
Despite the protections introduced by RERA, buying property in India is not entirely free from risk. Homebuyers may still face delays in dispute resolution and difficulties in obtaining effective relief from the concerned State RERA Authority.
The effectiveness of these protections depends largely on their implementation and enforcement. Delays in resolving disputes and enforcing orders can continue to pose challenges for homebuyers.
RERA has introduced an important regulatory framework for accountability in the real estate sector, but its existence alone cannot guarantee that every developer will fulfil their obligations or that every project will be completed on time.
A REASON TO TRUST
But something did change. Not because every builder suddenly became trustworthy, but because buyers now have something to check: a registration number, disclosures relating to project funds and legal deadlines with enforceable consequences. These may seem like small things on paper, but they make a significant difference to someone about to invest their life savings.
A house is rarely just a house in India. It is a retirement plan, something families proudly talk about at weddings, and proof that years of hard work have meant something. RERA did not lay a single brick. What it built was a framework for greater transparency, accountability and trust between homebuyers and developers.