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Author: Aadya Dipti, IV Year of B.A.LL.B from Banasthali Vidyapith, Rajasthan.

Introduction Indian government passed The Real Estate (Regulation and Development) Act to bring transparency in the process of buying a home. The act came into effect on 1st May 2017. The objective of the act is to protect buyers of a home, boost investment in real estate, and bring transparency and efficiency in the transaction process of real estate. There are various reasons for the implementation of this act like the real estate sector has no proper rules and regulations, an increase of fraud in real estate, black money in real estate, delays in a project which causes huge loss to the buyers of property, etc. Various other issues like delays in completion of projects, charging huge amounts of money, bad quality of construction triggered the government to implement this law. There was no grievance redressal mechanism where the home buyers can complain. The aim of the Real Estate (Regulation and Development) Act is to boost the investigation whether national or international in the real estate sector, enhance the accountability in the transaction process, increase growth in the execution of projects with efficiency and establish regulatory authority to settle the grievances.

Key provisions of The Real Estate (Regulation and Development) Act

The Act provides for the establishment of state-level regulatory authorities under which each state has to establish more than one authority. The function of regulatory authority is to register and publish data analysis of real estate projects, protect the interest of buyers and agents, development of housing which the buyers can afford, and ensure compliance with the rules of the act. 

This act made registration compulsory. All the projects of real estate having a plot size of a minimum of five hundred square meters need to be registered. Act mandates to deposit seventy percent of the funds collected from the buyer and these funds can only be used in the construction of that project.A real estate appellate tribunal needs to be established according to this act. The tribunal will be responsible for adjudicating the matters related to real estate. This is an appellate tribunal where the decisions of real estate regulatory authority can be appealed. According to provisions of this act in case of deficiency from the side of the promoter will be liable to pay compensation. Buyers will be charged for only carpet area which means the total area used for a flat in the floor area and not for the whole built-up area. Not more than ten percent of the cost of the plot will be charged by the promoter as an advanced payment without agreeing on sale. In case of violation of orders of Appellate tribunal and regulatory authority, the person will be liable for imprisonment up to three years in case of developers and up to one year in case of agents

Drawbacks of The Real Estate (Regulation and Development) Act

There are various drawbacks of the Real Estate (Regulations and Development) Act which creates to difficulties for both buyer and seller of property. Some of the major drawbacks are that regulations require prior approval which causes a delay in starting and completing projects. There are provisions that funds can only be use in projects and developers cannot invest this fund in another project. There are strict rules regarding the time limit of the completion of projects. The builders are losing their interest due to strict regulations and loss of profit. Real estate has the potential to create employment but due to the reduction of the interest of builders to invest in real estate employment opportunities are decreasing. There is a strong penalty to a builder that if the builder fails to comply with any provisions of this act he is liable for punishment up to 3 years and fine which are reducing interest of the builders. Various projects are still not registered as per provision of this act and the government is not taking proper steps regarding it. Some states still do not have real estate authority even after the implementation of this act in 2017. There are insufficient mechanism to comply with the guidelines of real estate authorities. Real estate laws should be more inclined towards the benefits of both developers and buyers. There should be the establishment of more mechanisms to boost the investor to invest in these sectors. The process of registration should be more developer-friendly. Government should make rules regarding delays in previous projects as well. Real estate is a growing sector in recent times and laws should be such that it can attract more and more investment from national as well as international investors.


In the past few decades, we have witnessed the increasing construction process in the urban as well as in suburban areas. India which is a developing country requires these infrastructures to grow its economy. House of is one of the basic needs of society and in urban area house is a dream for many people. The contractor and builder build the house and sell it to people. There are various malpractices in real estate like delays in the transfer of the house, high cost, black money, fraud, etc. As per requirement, Government implements the Real estate (Regulation and Development) Act, 2016 to make these processes more transparent and efficient. This act is to make provisions in favour of buyers of houses and to attract investment from investors. This act is made to attract more investment in an area of real estate but due to its strict rules and regulations, builders hesitate to invest in this. This act made certain rules like the limited fund; the fund can only be used in the project, approval for starting of projects, time taking registration process, etc. These are some drawbacks that make this law not so fruitful. Government should make changes in the registration process, regarding funds, approval process so that project could be conveniently completed on time. To encourage sustainable development of projects in real estate these rules are necessary.


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