What is RERA Act | 8 Major benefits of RERA Act for Investors

What is RERA Act | 8 Major benefits of RERA Act for Investors

The Real Estate (Regulation and Development) Act, 2016 passed by the Indian Parliament, is a historic reform in the real estate sector that gives powers to the consumer. The Act allows States to establish the Real Estate Regulatory Authority (RERA) for regulation and promotion of the real estate sector and to ensure the sale of plots, commercial or residential property in an efficient and transparent manner and to protect the interest of investors or consumers. Further, to adjudicating mechanism for timely dispute redressal and also to set up the Appellate Tribunal to hear appeals referred by the RERA (Real Estate Regulatory Authority).

The Rajya Sabha passed the RERA Bill on 10th March 2016 and subsequently passed by Lok Sabha on 15th March 2016. The bill came into effect on 1st May 2016. The rights of builders and buyers are protected under this law. The RERA has brought widespread transparency and accountability to real estate.

At IThum World, all our projects are registered with RERA. We build commercial space for our valuable clients taking all necessary measures. Quality, connectivity and timely possession are the key mantras of our success in real estate. Let’s have a detailed discussion on the benefits of RERA.

Benefits of the RERA Act

There are several benefits for real estate stakeholders like developers, consumers or real estate agents. The benefits are:

1. Standardization of Carpet Area

Earlier, there was no standard practice for the calculation of the carpet area due to a lack of clarity. The calculation of the same area was different for builders, buyers or any third party. But, after the introduction of the RERA Act, there is clarity and now it is well defined. Now, as per the RERA, the carpet area means the net usable floor area of an apartment excluding the walls, shaft, and balcony. It directly impacts the prices of the property, which favours the consumers and lowers the risk of disputes.

2. Lowers the risk of bankruptcy/insolvency of builders

Real estate builders run different projects simultaneously. The builders earlier practiced moving funds from one project to another. As a result, getting timely possession of the property was the biggest challenge for the consumers. But, after the RERA bill, the builders can’t practice such fund transfers. Now, the builder is liable to deposit 70% of the project cost in a separate bank account. It is not possible to withdraw money without the completion of the project. One needs to get the project completion report certified by the architect, civil engineer and Charted Accountant.

3. Advance Payment Cap

As per the prescribed rule, a builder can’t demand advance payment of more than 10% of the property cost. It helps build trust and also saves people from paying a large amount of money at a single time.

4. Buyer’s Right in case of any defects after possession

The builders are bound to rectify the damages or structural defect if noticed within 5 years from the possession of the property. In such cases, the buyers need not pay a single penny, and the repair work must be completed within 30 days of reporting the defect.

If the builder refuses to repair or fails to complete the task within the stipulated period, the consumer has the right to raise a dispute and claim compensation for the same.

5. Rights of the consumer if possession delays

Before RERA Act, there were a lot of cases where builders did not fulfil their promises of timely possession. Several cases are there in history, where investors suffer a lot, and their hard-earned money gets stuck for several years. The Real Estate Regulatory Authority ensure the smooth processing of real estate property deals. The consumer is more empowered and at less risk. The one has the following rights if possession delays:

  • The Right to withdraw from the project with the full refund along with interest payable from the due date of completion till the full amount is paid.
  • To continue with the project till its completion, the customer is liable to get compensation along with interest payable from the specified date of completion of the project till possession is granted.

6. Right to Information

The investor has full right to enquire about the project including project layout, design, execution and completion status. The builder needs to provide correct information under the law.

7. Rights of the consumer in case of a Title defect

Protection under RERA allows the consumer to approach the competent authority and seek compensation from the builder in case of a title defect. The builders are legally bound to compensate the buyer.

8. Grievance Redressal

If there is a grievance related to the project at any stage, the buyer, concerned person or authority can raise the matter with RERA. However, if the decision of RERA is not satisfactory, the consumer can approach Appellate Tribunal.

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RERA Act: Frequently Asked Questions (FAQs)

Q: What is RERA Act?

A: RERA stands for Real Estate Regulatory Authority which came into existence under the Real Estate (Regulation and Development) Act, of 2016. It gives protection to the buyers and real estate stakeholders from uncertainties and brings efficiency and transparency to real estate.

Q: Are RERA projects safe?

A: Of course, all RERA-approved projects are safe. When you invest in a RERA-approved property, your rights as a consumer are completely protected. The builders or developers are legally bound to deliver what they have promised.

Q: What is the benefit of RERA registration?

A: The objective of the RERA bill is to provide relief to the consumers, bring transparency and stop malpractices. RERA registration gives buyers a sense of protection that boosts investment in real estate.

Q: What is the exact RERA carpet area?

A: As per the RERA Act, the net usable floor area of the property plus the internal walls is the exact carpet area. The size of external walls, services shafts, exclusive balcony or Verandah area is excluded from the net carpet area.

Q: How does RERA Act, benefit builders?

A: As stated in this blog above, the RERA brings transparency to real estate. It helps exclude the builders involves in malpractices from the real estate market. Instead, genuine builders with RERA approval get support from the market and investors.

The Real Estate (Regulation and Development) Act


RERA is the historic reform in the real estate sector that gives both builders and buyers protection under the Real Estate (Regulation and Development) Act, of 2016. A RERA-approved project gives assurances to the investors for timely delivery of the property. It empowers the consumer and helps in the redressal of issues related to property disputes.