Importance of RERA Registration in Real Estate

Importance of RERA Registration
Dashmeet Kaur
| Updated: Feb 15, 2020 | Category: Government, Rera

Real estate industry has undergone remarkable growth and development over the years. A sudden thrift was admitted in the real estate market after Real Estate (Regulation and Development Act), 2016 came into effect. The Act established the Real Estate Regulatory Authority (RERA) in each Indian state to monitor properties possession. It aims to safeguard the interests of home buyers and increase investments in the real estate. Real Estate Act obligates all residential and commercial builders to register under RERA to prompt transparency in marketing & execution. This document constitutes the importance of RERA Registration in Real Estate.  

What is the need of RERA in Indian Real estate?

Real estate sector plays an essential role in bridging the gap between the ideal and an actual position of India’s infrastructure. Despite that, it has always been unorganized with an absence of standardization and lack of sufficient consumer protection.

Unprofessionalism has always been a constraint to the steady advancement of Real estate industry. Though the Customer Protection Act, 1986 was accessible to the consumers to report their grievances, they were never addressed. Thus, it becomes indispensable to have central legislation to bring standardization, uniformity and efficient consumer protection in Real estate sector.

Subsequently, RERA came into the picture in 2016 with a mission to revamp the structure of Real estate for better. Here are some of the significant aspects that the Real Estate (Regulation and Development) Act seeks to accentuate:

  • Tightens security:Real Estate (Regulation and Development Act), 2016 tightens the rules on the use of investments done by the home buyers or investors. As per the Act, about 70% of the investors’ and buyers’ money shall be kept in a separate bank account. Moreover, it restricts the builders to use that money only for construction and land-related purposes. A builder cannot ask for an advance payment of more than 10% of the property’s cost before signing the Sale Agreement.
  • Higher transparency: When RERA took over the Real estate market, it compels all the builders to submit the valid documents of all their ongoing and future projects. The builders cannot make any amendments in the plans without the buyer’s consent.
  • Fair dealings: RERA commands the builders to sell the properties in correspondence to the carpet area rather than on super built-up area. If a project gets delayed, then either the buyers will receive an entire refund of the money invested or they may choose to get monthly investment on their money.
  • Supreme authorization:  The importance of RERA Registration in Real Estate can be considered from the fact that no real estate agent/builder can sell, build, advertise, book or invest a plot without RERA Registration. Once registered under RERA Act, the builders will get a unique project-specific Registration number for different projects.
  • Quality Assurance: Real Estate Regulatory Authority predominantly supports the buyer’s interest. Thus, if a buyer feels dissatisfied from the quality or discovers any structural defects within five years of purchase, then the builder needs to rectify the issue within 30 days of the complaint.

Browse through our articles on services provided at Swarit Advisors, and just let us know if we can help you with your company registration or tax filing or trademark registration.

Penalties imposed for non-compliance under RERA

The builders, promoters or agents who disregard the importance of RERA License and do not oblige to the legal provisions have to bear hefty penalties. The following table depicts the offences and their consequent penalties under RERA Act:




Non-Registration of a Real estate project

10% of the estimated project’s cost

Violation of RERA laws

Either 10% of the estimated project’s cost or imprisonment upto 3 years or  both

Providing a false piece of information

5% of the estimated cost of the project


Non-compliance with RERA Act

Daily penalty of 5% of the approx. project’s cost

Contravention of the orders of Appellate Tribunal

Imprisonment upto 3 years with or without fine that culminates about 5% of the estimated project’s cost


Not registering a real-estate project

Rs.10,000 per day up to 5% of the approximate cost of the project

Contravention of RERA orders

Daily penalty of 5% of the estimated project value

Non-compliance with Appellate Tribunal

1 year of imprisonment or 10% of the project’s estimated value or both


Violation of RERA orders

Daily penalty of 5% of the approximate project’s cost


Contravention of the direction of Appellate Tribunal

10% of the approximate project’s value or imprisonment of 1 year or both

The list of penalties showcases the importance of RERA Registration in Real Estate to commence any business in Real estate sector. The only way to surpass the penalties is to adhere to the legal compliances of RERA Act.

Top 5 reasons for RERA Registration

RERA is not only beneficial for home buyers, but it also avails numerous perks to real estate promoters and agents. It contributes a large part to underpin Real estate market and cultivate professional practices for builders as well as investors. Let’s take a look at the advantages of RERA Registration and its importance:

  1. Builds customers trust– RERA Certification improves the credibility of the Promoter and real estate brokers. It acts as proof that a builder is complying with the provisions of RERA and helps to attract more prospective buyers.
  2. Flexibility- RERA enables the Promoters to select a date of project delivery as per their consent. Hence, it gives them the flexibility to execute the plan of action.
  3. Prevents insolvency- Since RERA has made it mandatory for the builder to maintain a separate Escrow account, so it prevents insufficiency of funds for future construction purposes.
  4. Raise the level of professionalism- Real Estate Regulatory Authority strengthens the foundation of Real estate sector. It encourages builders to attain long term goal with a professional outlook.
  5. Grievance Redressal- Another perk of RERA Registration is that the Promoter, broker or buyers can report their complaints in regards to any matter. Thereby, get a solution for the same.


The importance of RERA Registration in the Real estate industry is beyond evaluation. The entire sphere of Real estate revolves around the compliance and guidelines of RERA Act.

If you want to register under RERA, take legal assistance from Swarit Advisors. We can help in filing the online RERA Application, draft documents and provide project-based consultancy.

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