REAL ESTATE (REGULATION &

DEVELOPMENT) ACT, 2016

Group 9
 Legal Aspects of Business | Group 9

Meet the Group

Name Roll No.

Abhishek Kumar Singh H002-22
Anushree Kar H008-22
Ashish Abhishek Minz H013-22
Harsh Yadav H031-22
Kuldeep Singh H036-22
Maniratnam Porwal H039-22
Monica Rohini H042-22

1|Page
 Legal Aspects of Business | Group 9

Content
• Introduction ………………………………………………………………………………. 3
• Scope and applicability of the Real Estate
(Regulation and Development) Act, 2016 ……………………………………… 4
• Importance of the Real Estate (Regulation and
Development) Act, 2016 ……………………………………………………………… 4
• Salient features of Real Estate (Regulation and
Development) Act, 2016 …………………………………………………………….... 4
• Advantages of RERA ……………………………………………………………………. 5
• Disadvantages of RERA ………………………………………………………………… 6
• Impact of the Real Estate (Regulation and
Development) Act, 2016 on the industry ………………………………………. 6
• The economic impact of RERA on the industry ……………………………... 7
• Conclusion …………………………………………………………………………………… 7
References

2|Page
 Legal Aspects of Business | Group 9

Introduction
The real estate industry is an integral part of the economy and helps the country meet its needs and wants
for housing and infrastructure. Even though this sector has grown significantly in recent years, it hasn't
been well-regulated. There aren't enough standards, and buyers don't have enough protection. Even though
the Consumer Protection Act of 2019 gives real estate buyers a place to talk about their problems, this
option is only a band-aid and doesn't solve all of the issues that buyers and promoters in that sector face.
The lack of uniformity has made it hard for the industry to grow healthy and orderly. So, various forums
have brought up the need for regulating the sector.

The real estate market was struggling because there were no strict rules. The most important thing at the
time was to set up a large-scale governing body. The National Housing Development and Municipal
Administration Ministers conference in 2009 discussed affordable housing for everyone. The forum
discussed land-use policies, ways to improve the finances of local public bodies, and a plan for making
cities without shacks. The Ministry of Housing and Urban Poverty Alleviation made a draught Real Estate
bill as part of the discussion to deal with issues like how land is valued and urban areas should flourish.

In July 2011, the Ministry of Law and Justice advised that the legislation should be on the concurrent list
of the Indian Constitution. The Real Estate (Regulation and Development) Bill was brought up in Rajya
Sabha on August 14, 2013. Based on suggestions from the Rajya Sabha Committee, the Union Cabinet
made twenty significant changes to the bill in December 2015. Then, on March 10, 2016, the Rajya Sabha
passed the law, and on March 15, 2016, the Lok Sabha did the same.

The Real Estate (Regulation and Development) Act, 2016, also known as the RERA Act, was passed by
Parliament with its goal is to protect the rights and interests of consumers by reducing the amount of
wrongdoing by developers and making business practices and transactions in the real estate sector more
uniform. The RERA Act came into effect on and from May 1, 2016.

The Housing and Urban Poverty Alleviation Ministry then released the general rules of the Real Estate
(Regulation and Development) Act, 2016, on October 31, 2016.

3|Page
 Legal Aspects of Business | Group 9

Scope and applicability of the Real Estate (Regulation and

Development) Act, 2016

The Real Estate (Regulation and Development) Act of 2016 applies to all India except Jammu and Kashmir.
The RERA Act applies to residential apartments, buildings, and plots, whether used for living or business.
The Act's definition of a "Real Estate Project" includes the construction of apartment buildings, the
conversion of existing buildings into apartments, and the development of land into plots for the sale of all
or some flats. These things are done to carry out the goals of the Act.

Under the RERA Act, all more than 500 square meters projects must be registered. The main things that
the RERA Act covers are all information about the project, contracts for buying and selling properties, the
size of the carpet, the maximum advance fee of 10% of the apartment, putting 70% of the money collected
from buyers in an escrow account, finishing the project on time, and penalties for not doing so. So, it is
essential to remember that the RERA Act is a comprehensive law that applies to all of the above projects,
whether commercial or residential.

Importance of the Real Estate (Regulation and

Development) Act, 2016

Real estate was previously unregulated. Before, there were no rules about how real estate worked. RERA
protects buyers or investors, giving them more faith in the market. It needs to be open and have the authority
to track how it works. In reality, it offers buyers a clean slate and lowers the risk for buyers or investors
who bought or invested in real estate before the Act went into effect. The Act makes it clear how buyers
and developers should work together. It spells out how suppliers and buyers can build trust with each other.
It has even set up a state agency to keep an eye on business and real estate deals. The RERA Act is now
helping Indian homebuyers get their real estate projects on time, which is a great relief for them.

Salient features of the Real Estate (Regulation and

Development) Act, 2016
• Establish the Real Estate Regulatory Authority to regulate and promote the real estate sector.
• To carry out the sale of plots, buildings, or apartments, as the case may be, or the sale of all real estate
projects transparently and efficiently.

4|Page
 Legal Aspects of Business | Group 9

• To protect the interests of the consumers and buyers and prevent malpractices against them.
• To establish adequate and speedy dispute redress systems and Appellate Tribunals to hear and
adjudicate appeals from the orders, directions, or decisions of the Real Estate Regulatory Authority.
• Establishes state-level regulatory authorities called RERA.
• To work on residential real estate projects and register all the tasks to be undertaken, without which the
promoters cannot promote or sell.
• To cast duties on the promoters to upload project details on the website, including layout and site plans.
• To ensure that two-thirds of the allottees give their written consent in addition to RERA's written
approval when a promoter has to transfer or assign a majority of the rights and responsibilities in a real
estate project to a third party.
• To ensure that the buyer or promoter, as the case may be, pays an equal sum in the event of any default.
• Where the promoter causes the buyer any loss due to other people claiming property (defective title of
property) that has been built or is being built, the promoter shall be liable to pay compensation to the
buyer.
• Ensure that the money collected from project buyers must be kept in a separate bank account and
utilized solely for the project's construction. This sum is subject to change by the State Government.
• The Act provides the right to legal representation on behalf of the client by a CA, CS or CMA, or legal
practitioner.
• It imposes a stringent penalty on promoters and real estate agents and prescribes imprisonment.

Advantages of RERA
• Adequate financial inflow: The Goods and Services Tax (GST) and the resulting liberalization of FDI
have helped RERA make business easier. Since the RERA Act has brought back trust and openness,
lenders are more likely to give money to builders.
• Increased competition: There are more chances of getting the real estate market back on track, which
• will make homebuyers want to invest and buy property without worrying about being scammed.
Because these rules are so progressive, they will likely make developers compete with each other since
buyers will be less afraid to put their money into new projects.
• Better functioning: In the past, there weren't any applicable rules or regulations for the real estate
business. There were also a lot of problems that hadn't been solved. The RERA act made it easier for
the real estate industry to work quickly and consistently.

5|Page
 Legal Aspects of Business | Group 9

• Transparency: Transparency is an essential part of the Act and helps both the buyer and the seller.
Being honest also helps build a good relationship between the builder and the customer.

Disadvantages of RERA

• The rules and regulations of RERA don't apply to projects that started before RERA was put into place.
• Compulsory registration may be a drawback because the government can take a long time to approve
a plot.
• Politics are also a part of this business. Sometimes the government asks for more money or tells them
they have to bribe the government to get approval, which causes financial problems.
• There are no specific rules to follow for buildings that are less than 5000 square meters. This will let
them charge too much, which will cause a problem.
• It takes about two years for the promoter to get clearance, slowing the sector's growth.
• RERA doesn't say anything about rentals.
• There are harsh punishments. If this Act is broken or its rules aren't followed, the penalty is 5% of the
project's cost.

Impact of the Real Estate (Regulation and Development)

Act, 2016 on the industry

The implementation of RERA has caused significant disruption in the business. The real estate business
has contributed significantly to the country's economy. Still, this measure has harmed the industry, and all
builders are currently in financial distress as the Act directly impacts the prices of homes and home loan
interest rates. The sector is beset by financial difficulties and has been hampered by numerous obstacles.

Because of regulations, the real estate markets in many states are becoming more open and trustworthy.
Everyone who buys is expected to get benefits over time. Technology-enabled platforms that can handle
larger data sets that are not yet recognized by many countries can improve the Act's scope and spirit. The
expected benefits of the Act are likely to grow as more attention is paid to making it work.

6|Page
 Legal Aspects of Business | Group 9

The economic impact of RERA on the industry

The Union Government put in place three significant policies in India. The demonetization, Goods,
Services Tax, and the Real Estate (Regulation and Development) Act have significantly affected the
economy. After six months of demonetization, which hurt the real estate market and slowed its growth,
RERA was implemented. Small developers and contractors, especially in cities, were damaged by RERA
because many of their planned real estate projects had to be scrapped or put on hold until they were
registered under RERA Act. This made it hard for workers to find work. There were also changes to who
was responsible for what and how much responsibility the builders had when delivering the property.

Furthermore, it led to a situation where sellers could not possibly sell the property at lower prices due to
limited incentives, and buyers were not willing to buy property due to their income being hit by
demonetization or the reduced liquidity of the property. The real estate market was downright sluggish,
causing economic impacts and imbalance.

7|Page
 Legal Aspects of Business | Group 9

Conclusion
The Act is a big step forward in making the real estate market more open, holding promoters and developers
more accountable, and giving people a way to solve their problems. Since the highly corrupt sector has
strict rules and regulations, there will be less litigation. Setting up laws like RERA is a big step towards
making customers, promoters, and builders more aware of their rights. In the future, the modernization of
land records, the purchase of land, and GST could be given more importance for the growth of the real
estate market, just like RERA. Different policies put in place by the RERA would lead to significant
changes in the economy and society, which would help the long-term growth of the RERA and create a
customer-friendly environment.

References
• Reference 1
• Reference 2
• Reference 3
• Reference 4
• Reference 5
• Reference 6
• Reference 7

8|Page