Real Estate (Regulation and Development) Act 2016: A Complete Guide
The Real Estate Regulation and Development Act 2016 reshaped the property market in India, giving homebuyers real legal protection for the first time. Before this law, buyers often had little recourse against delays, hidden charges or diverted funds. This guide explains what the Act is, when it came into force, its structure, key provisions, penalties and the rights it gives buyers, using verified facts. Whether you are buying a home or simply want to understand your protections, this is the law that stands behind you.
What is the Real Estate Regulation and Development Act 2016?
The Real Estate (Regulation and Development) Act 2016 is a central law, numbered Act No. 16 of 2016, passed to regulate the property sector and protect homebuyers. The Rajya Sabha passed it on 10 March 2016 and the Lok Sabha on 15 March 2016, and it received assent on 25 March 2016. It came into force on 1 May 2016, when 61 of its 92 sections were notified, with the remaining 31 sections notified on 1 May 2017.
The law is commonly called the RERA Act. Each state set up its own Real Estate Regulatory Authority to enforce it, and Rajasthan implemented it on 1 June 2017. It extends across India, and requires developers to register projects, disclose honestly and answer to a regulator.
Why the Act was introduced
For years the property sector ran with little regulation, and buyers carried most of the risk. The real estate regulation and development act was created to correct that.
- To bring transparency to how projects are sold
- To protect buyers from delays and false promises
- To stop the diversion of buyer funds to other projects
- To set up a regulator and a fast dispute-resolution system
- To hold developers and agents accountable
The result is a market where a buyer can check facts, rely on commitments and seek redress, rather than trusting on faith alone.
Structure of the Act: 10 chapters and 92 sections
The Act is a complete regulatory code, organised into 10 chapters and 92 sections. Knowing its structure helps you see how thorough it is.
| Chapter | Coverage |
|---|---|
| I | Preliminary, title and definitions |
| II | Registration of projects and agents |
| III | Functions and duties of the promoter |
| IV | Rights and duties of allottees (buyers) |
| V | The Real Estate Regulatory Authority |
| VI | The Central Advisory Council |
| VII | The Real Estate Appellate Tribunal |
| VIII | Offences, penalties and adjudication |
| IX | Finance, accounts, audits and reports |
| X | Miscellaneous provisions |
This structure covers the whole journey, from registering a project to resolving a dispute, which is why the rera act is described as a self-contained framework.
Main objectives of the RERA Act
The rera act has a few clear goals at its heart.
- Transparency: developers must disclose project, plan and timeline details
- Accountability: builders answer to a regulator for their commitments
- Financial discipline: buyer money is ring-fenced for the project
- Buyer protection: clear rights on possession, quality and refunds
- Speedy justice: a dedicated authority and appellate tribunal for disputes
Key provisions of the Act
The Act introduced several protections that buyers now rely on.
- Project registration: projects above the size threshold must register before being marketed or sold
- Sale on carpet area: prices are based on carpet area, not inflated super built-up area
- The 70 percent rule: most buyer funds are locked in a dedicated project account
- Timely possession: builders owe interest for delays in handing over
- No unilateral changes: a promoter cannot alter the project without buyer consent
- Structural defect liability: a five-year window to fix structural defects after possession
- Agent registration: property agents must register too
These protections apply nationwide, including to new flats in Jaipur and other growing markets.
The three types of RERA accounts
To enforce the 70:30 rule, a project uses three designated bank accounts.
| Account | Purpose |
|---|---|
| Collection Account | Receives 100 percent of the money paid by buyers |
| Separate RERA Account | Holds 70 percent, for construction and land cost only |
| Transaction Account | Holds the remaining 30 percent for other approved expenses |
Money moves from the collection account into the 70 and 30 percent accounts automatically. A developer can withdraw from the 70 percent account only in proportion to construction progress, certified by an architect, an engineer and a chartered accountant. This keeps spending tied to real work on the ground.
Penalties under the Act
The Act has real teeth, set out in its offences and penalties chapter.
- A promoter who fails to register can face a penalty of up to 10 percent of the project cost, and imprisonment for continued default
- Contravening other provisions can attract further penalties
- A promoter who ignores a tribunal order can face imprisonment of up to one year, or a further penalty, or both
- An allottee or agent who defaults faces their own penalties
These penalties are what give the law its force, turning rules into real obligations.
The Real Estate Appellate Tribunal
The Act also created a clear path to justice. Disputes are first heard by the Authority or an adjudicating officer, and appeals go to the Real Estate Appellate Tribunal. An appeal must be filed within 60 days, and the tribunal aims to dispose of it within 60 days. A further appeal lies to the High Court. This structure was designed for speed, sparing buyers the years a civil court case can take.
Which projects are exempt from registration?
Not every project must register. The main exemptions are:
- Projects on land of 500 square metres or less and with 8 units or fewer
- Projects that received a completion certificate before the Act came into force
- Renovation or redevelopment work that involves no fresh marketing or sale
If a small project falls below the threshold, its lack of registration is not a red flag, though buyers should still verify title and approvals.
What is a RERA audit?
The Act requires ongoing financial checking. Under its provisions, a promoter must get the project accounts audited within six months after the end of each financial year, by a practising chartered accountant. This yearly audit confirms that the money collected and the amounts withdrawn match the project's progress, and that funds were used correctly. It is a key reason the system stays trustworthy across a project's life.
Rights the Act gives homebuyers
For buyers, the real estate regulation and development act translates into concrete rights.
- The right to accurate project information before buying
- The right to buy on carpet area, so you pay for usable space
- The right to timely possession, with interest for delays
- The right to have structural defects fixed for five years
- The right to a refund with interest if the builder defaults
- The right to a fast complaint and appeal process
Buyers looking at apartments in Jaipur or property in Jaipur now expect these protections as standard.
How the Act affects developers
The law raised the bar, and serious developers welcomed it. Builders must register, disclose honestly, ring-fence funds, deliver on time and answer to the regulator. This rewarded transparent developers and pushed out unreliable ones. When you assess the top builders in Jaipur, a clean record of registered, compliant projects is a strong signal of trust. Buyers of flats in Jagatpura and other areas can ask for the RERA number and verify it on the state portal.
Is RERA required for rental property?
A common question is whether the Act covers renting. The Act mainly governs the sale and development of real estate projects, not private rental agreements between a landlord and tenant, which fall under state rent and tenancy laws. So a straightforward rental of an existing flat does not need RERA registration, though the project the flat sits in would have been registered when it was built and sold.
Conclusion
The Real Estate Regulation and Development Act 2016 replaced a market built on trust with one built on rules. Across its 10 chapters and 92 sections, it gives buyers transparency, financial protection, timely possession and a real path to justice, while holding developers to account through registration, audits and penalties. Understanding the Act helps you buy with confidence, ask the right questions, and recognise a compliant developer. In a purchase as big as a home, that knowledge is genuine power.
FAQs
1. What is the main goal of the Real Estate (Regulation and Development) Act 2016?
Its main goal is to protect homebuyers and bring transparency and accountability to the property sector. It does this by requiring project registration, ring-fencing buyer funds, setting rules on possession and quality, and creating a regulator and appellate tribunal for disputes.
2. What is the 70 percent and 30 percent rule in RERA?
Developers must deposit 70 percent of the money collected from buyers into a dedicated project account, used only for that project's construction and land cost. The remaining 30 percent covers other approved expenses. The rule prevents funds from being diverted to other projects.
3. What are the three types of RERA accounts?
A project uses a Collection Account that receives all buyer money, a Separate RERA Account holding 70 percent for construction and land cost, and a Transaction Account holding the remaining 30 percent. Withdrawals from the 70 percent account are tied to certified construction progress.
4. Which projects are exempt from registration under the Act?
Projects on 500 square metres or less with 8 units or fewer, projects that received a completion certificate before the Act began, and renovation work with no fresh sale are exempt from registration under the Act.
Anil Shah
The Anil Shah editorial team writes about Jaipur real estate - market trends, home-buying guides, RERA updates and investment insights - drawing on 25+ years of building landmark residential and commercial projects across the city.
Looking for your dream property in Jaipur?
Explore RERA-certified homes & commercial spaces by Sankalp Group. Book a free site visit today.