If you are considering a real estate investment in India, one crucial question to ask is why RERA approval is required. The Real Estate (Regulation and Development) Act, or RERA, was introduced in 2016 to safeguard homebuyers and bring order to a previously unregulated industry. Its primary objective is to ensure transparency, accountability, and timely project delivery. A RERA-approved project indicates that the developer complies with legal norms, giving buyers peace of mind and investment security.
Before the RERA Act, the real estate sector lacked clear regulatory oversight. Buyers often faced misleading advertisements, indefinite project delays, and vague payment structures. RERA has dramatically reduced such malpractices by mandating that developers register their projects and adhere to strict guidelines laid down by the authority.
Why RERA Is Important to Buyers
Understanding why RERA is important to buyers starts with knowing what protections the Act provides. Any residential or commercial project exceeding 500 square meters or involving more than eight units must be registered with the state’s RERA authority. Developers are also obligated to disclose full project information, including land ownership, layout plans, legal clearances, timelines, and promised amenities—making all essential details available on the RERA portal.
This level of transparency allows homebuyers to verify whether a project is legally approved before investing. Most importantly, developers are legally bound to adhere to the promised possession date. If they fail to do so, buyers are entitled to compensation or a refund with interest.
RERA also enforces financial discipline. Developers must deposit 70% of the funds collected from buyers into an escrow account designated for that specific project. This measure ensures that your money is not misused or redirected to other ventures, a common problem before RERA came into effect.
Moreover, buyers now have access to a dedicated dispute resolution mechanism. Complaints against developers can be lodged directly with the RERA authority, which is mandated to resolve cases quickly and fairly.
Buying Home Before RERA: A Risky Decision
To truly grasp the value of RERA, consider what buying a home before RERA was like. In the absence of regulation, developers often promised early delivery but missed deadlines by years. There were no standardized definitions of terms like “carpet area” or “super built-up area,” leaving buyers confused and shortchanged.
It was also common for builders to alter project specifications midway or introduce unexpected cost escalations. Worse, there was little legal support for buyers seeking refunds or accountability in such cases.
The implementation of RERA addressed these issues head-on. It introduced standardized practices for real estate advertising, pricing, and delivery timelines. Buyers now know exactly what they are purchasing, when it will be delivered, and what quality standards to expect.
Legal Assurance for Buyers
Perhaps the most important reason why RERA approval is required is the legal protection it provides. Developers who violate RERA norms face strict penalties, cancellation of project registration, or even imprisonment. This has led to a significant improvement in ethical business practices across the sector.
Additionally, developers cannot make changes to the layout, amenities, or project timeline without the written consent of the majority of buyers. This provision gives buyers greater control and assurance throughout the construction phase.
Final Thoughts
In conclusion, knowing why RERA approval is required is essential for every homebuyer. It ensures legal compliance, financial safety, transparent transactions, and timely delivery. Whether you're purchasing your first home or making an investment, opting for a RERA-registered project minimizes risk and protects your interests.