About Delhi RERA

Vision & Mission

Vision: To protect the interest of all stakeholders in Real Estate Sector and to be a catalyst for facilitating growth & promotion of Real Estate Sector in the country.

Mission: To be an efficient Regulatory Authority in the Real Estate Sector that works in most transparent & accountable manner to serve various stakeholders.

Core Values of the Authority

To establish an institution which ensures there is transparency, accountability & symmetry of information

To adopt information technology tools for efficient & transparent functioning of the Authority

To debate & advise appropriate Government on various issues effecting the Real Estate market

To create a Real Estate market in which there is no trust deficit

To constantly aim at upgrading the skills & knowledge of employees & other stakeholders

To constantly engage with various Shareholders for facilitating & accelerating growth of Real Estate sector

To provide faster mechanism for dispute resolution in Real Estate sector

The Background

1.1 A BRIEF

The Real Estate (Regulation and Development) Bill was introduced in the Rajya Sabha in 2013. Later on, it was referred to the Select Committee. The Rajya Sabha Select Committee, examining the amendments to the Real Estate (Regulation and Development) Bill, 2013, submitted its report in July, 2015. The Bill was passed in the Rajya Sabha on 10th March, 2016 and in the Lok Sabha on 15th March, 2016.

The Bill sought to standardise business practices and transactions in the real estate sector. It intended to ensure consumer protection as well. The Bill envisaged establishment the Real Estate Regulatory Authorities at the state level for redressal of grievances against any builder. It also aimed to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover.

The Bill, inter alia, proposed to make it obligatory for developers to post all information on issues such as project plan, layout, government approvals, land title status, sub-contractors to the project and completion schedule with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.

The Bill provided for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals.

1.2 REAL ESTATE SECTOR ISSUES BEFORE REFORMS

Prior to enactment of the Real Estate (Regulation and Development) Act, 2016, the real estate sector was riddled with several challenges including information asymmetry, lack of financial discipline, skewed transactions favoring the developers, and limited grievance redressal forums for consumers. The above challenges precipitated the need to establish relevant laws and create an implementation body that would specifically deal with the challenges in the real estate sector. It is important to understand that Real Estate (Regulation and Development) Bill, 2013 was introduced not just to protect the rights of the buyers but also to alleviate the many pain points in the real estate ecosystem. In addition to protecting consumer rights and putting greater onus on the builder, it also attempted to create an institutional structure. Institutionalization of the real estate sector will make it easier for developers to raise funds from banks, Private Equity (PE) firms, and Real Estate Investment Trusts (REITs). In the process, all the stakeholders in the ecosystem will benefit.

Before the initiation of reforms, the real estate sector in India faced numerous issues and irregularities. Homebuyers were often duped by builders through various malpractices, including the rampant use of black money, diversion of funds, and a general lack of accountability. In the absence of specific laws to regulate the sector, homebuyers had to seek remedies under laws like the Indian Contract Act, 1872 and the Consumer Protection Act, 1986 which involved lengthy litigation processes. There was no speedy grievance redressal mechanism for genuine problems faced by either homebuyers or developers. As a result, preventive measures were lacking, and curative measures were the only recourse.

All this resulted in a situation where despite making full payments, homebuyers frequently faced issues with the timely completion and delivery of homes. Builders would unscrupulously divert funds to other lucrative investments, leaving homebuyers not only without their lifetime savings but also burdened with repaying loans along with interest to banks, without having a roof over their heads. One-sided agreements heavily favored developers, forcing homebuyers to pay various extra charges, including cost escalations, while developers were not held accountable for any contraventions of promised deliverables. Additionally, there was an unequal rate of interest to be paid by promoters and buyers in case of defaults or delays, leading to inequity and injustice. Homebuyers often fell prey to unscrupulous builders who lured them into investing in non-approved projects with promises of high returns. Developers misled homebuyers with false promises regarding various features, layouts, and amenities of projects, only to later retract on these promises.

1.3 STATEMENT OF OBJECTS AND REASONS FOR REFORMS

The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardisation and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardisation has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasised in various forums.

2. In view of the above, it became necessary to have a Central legislation, namely, the Real Estate (Regulation and Development) Bill, 2013 in the interests of effective consumer protection, uniformity and standardisation of business practices and transactions in the real estate sector. The proposed Bill provided for the establishment of the Real Estate Regulatory Authority (the Authority) for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority.

3. The proposed sought greater accountability towards consumers and significantly reduce frauds and delays, as also the current high transaction costs. It attempted to balance the interests of consumers and promoters by imposing certain responsibilities on both. It aimed to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, set minimum standards of accountability and a fast track dispute mechanism. The proposed Bill had the objective to induct professionalism and standardisation set minimum standards of accountability and a fast-track dispute resolution in the sector, thus paving the way for accelerated growth and investments.

4. The Real Estate (Regulation and Development) Bill, 2013, inter alia provides for the following, namely

to impose an obligation upon the promoter not to book, sell or offer for sale, or invite persons to purchase any plot, apartment or building, as the case may be in any real estate project without registering the real estate project with the Authority,

to make the registration of real estate project compulsory in case where the area of land proposed to be developed exceed one thousand square meters or number of apartments proposed to be developed exceed twelve;

to impose an obligation upon the real estate agent not to facilitate sale of purchase of any plot, apartment or building, as the case may be, without registering himself with the Authority;

to impose liability upon the promoter to pay such compensation to the allottees, in the manner as provided under the proposed legislation, in case if he fails to discharge any obligations imposed on him under the proposed legislation;

to establish an Authority to be known as the Real Estate Regulatory Authority by the appropriate Government, to exercise the powers conferred on it and to perform the functions assigned to it under the proposed legislation;

the functions of the Authority shall, inter alia, include -

to render advice to the appropriate Government in matters relating to the development of real estate sector;

to publish and maintain a website of records of all real estate projects for which registration has been given, with such details as may be prescribed;

to ensure compliance of the obligations cast upon the promoters, the allottees and the real estate agents under the proposed legislation;

to establish an Advisory Council by the Central Government to advice and recommend the Central Government on

matters concerning the implementation of the proposed legislation;

major questions of policy;

protection of consumer interest;

growth and development of the real estate sector;

to establish the Real Estate Appellate Tribunal by the appropriate Government to hear appeals from the direction, decision or order of the Authority or the adjudicating officer;

to appoint an adjudicating officer by the Authority for adjudging compensation under sections 12, 14 and 16 of the proposed legislation;

to make provision for punishment and penalties for contravention of the provisions of the proposed legislation and for non-compliance of orders of Authority or Appellate Tribunal;

to empower the appropriate Government to supersede the Authority on certain circumstances specified in the proposed legislation;

to empower the appropriate Government to issue directions to the Authority and obtain reports and returns from it.

THE REAL ESTATE (REGULATION & DEVELOPMENT) ACT, 2016

2.1 KEY FEATURES OF THE ACT

The Real Estate (Regulation and Development) Act, 2016 introduced several key reforms to address issues in the real estate sector:

Establishment of Regulatory Bodies: the Act mandated the creation of Regulatory Authorities, Adjudicating Officers, and Appellate Tribunals for speedy dispute resolution. Cases are to be decided within sixty days from the date of application or appeal;

Applicability: the Act applies to both residential and commercial real estate, covering private and public bodies engaged in sales;

Mandatory Project Registration: Projects exceeding 500 square meters or involving more than eight apartments must be registered with the Regulatory Authority. This protects homebuyers by ensuring only registered projects can be launched, reducing the risk of misrepresentation by developers;

Registration of Real Estate Agents: All agents dealing in real estate projects must register with their respective State Real Estate Regulatory Authorities. Developers cannot take deposits or advances without first entering into a sale agreement with the homebuyer;

Project Details for Registration: Developers must provide specific details at the time of project registration, including sanctioned plans, layout plans, project specifications, proforma of Allotment Letter, Agreement for Sale, Conveyance Deed, number and type of apartments and garages, and the project completion timeline;

Separate Bank Account for Each Project: Developers must maintain 70% of the funds collected from homebuyers in a separate bank account, used exclusively for the construction and land cost of that project. Withdrawals require certification from an engineer, architect, and chartered accountant regarding project completion;

Online Information of Registered Projects: An online portal allows homebuyers to make informed decisions. Developers must update project details and status quarterly;

Mandatory RERA Registration Number: Developers must include the RERA registration number in all advertisements and prospectuses;

Equal Treatment for Homebuyers and Developers: Developers are legally obliged to pay the same rate of interest to homebuyers in case of delays;

Formation of Resident Associations: Developers must facilitate the formation of homebuyer or resident associations and execute a registered conveyance deed for common areas in favor of the association after paying all outgoings;

No Changes Without Consent: Developers cannot alter or add to the sanctioned plans, layout plans, or project specifications without the written consent of two-thirds of the allottees;

Refund in Case of Delay: If a developer fails to complete the project as per the sale agreement, the homebuyer can seek a refund with interest or request interest for each month of delay until possession is handed over;

Penal Provisions: RERA includes strict penal provisions, including imprisonment, in addition to provisions for refunds, interest, and penalties for non-compliance by developers, allottees, and agents.