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What is RERA?

To bring transparency to the home buying process, the Government of India passed the Real Estate Regulatory Authority (RERA) Bill in May 2016. Initially, only 52 of the 92 sections in this bill were notified in the RERA Act, but the remaining 40 sections also came into effect on the 1st of May 2017.

The Real Estate (Regulation and Development) Act was introduced by the Government to protect the interests of homebuyers in India and boost real estate investments across the country. Since its inception, the RERA Act has brought about a flurry of improvements in the real estate industry, such as better fraud protection, enhanced transparency about carpet areas, timely delivery of projects, and prevention of misuse of funds through a reserve account, among others.

That is why it’s always a smart choice to pick a RERA-registered property while buying a house or commercial space. The RERA Act is applicable in all Indian states and Union Territories. If you wish to purchase a RERA-registered property in India, you can avail of a Tata Capital Home Loan in a few simple steps.

What is the Objective of RERA?

The RERA act was essentially launched by the Government of India to protect homebuyers from the malpractices of unfair builders. It was also implemented to address the concerns of various stakeholders in the real estate industry, including buyers, brokers, builders, and real estate agents. The overall objective of the RERA Act is to eliminate the prevalent problems in the sector and bring about positive changes in every aspect.

As a result, numerous RERA communities have been set up by the Government across different states of India to oversee whether the rules and guidelines specified by the RERA Act are being strictly followed or not. At present, all builders and developers in India are mandated by law to register their projects with these state bodies for approval.

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    Key Benefits & Salient Features of RERA

    After the implementation of the RERA Act, there have been increased transparency and uniformity across the real estate sector. RERA has brought about several positive changes in different facets of the industry. Here are some key benefits of the RERA Act:

  • Standardization of the Carpet Area

    One of the several advantages of the Real Estate Regulatory Authority is the standardization of carpet areas across real estate projects. Unlike before, builders now use a standard formula for measuring the carpet areas of their project units. The RERA Act also prohibits promoters from advertising inflated carpet areas to escalate the selling prices.

  • Reduction in Advance Payment

    After the implementation of the RERA Act, builders or developers cannot ask for advance payments of more than 10% of the property’s cost before the buyer has signed the sales agreement. This will help the buyers immensely to plan their finances better before availing of a home loan to purchase a property.

  • Timely Delivery of Projects

    Under the Real Estate Regulatory Authority, if the builder fails to complete the project by the promised date, the buyer has the right to withdraw from the project, and they shall be entitled to receive a full refund from the builder. Else, the builder is required to pay specific interest to the buyer on the amount invested by them till the completion of the project.

  • Quick Conflict Resolution

    One of the objectives of the RERA bill was to ensure quick dispute resolution and grievance redressal of buyers. Under the RERA Act, if the buyers have any grievances against the builder, they can take them up with the state authorities set by the Government. They can even file an appeal with the Appellate Tribunal, which will redress their grievances within 60 days.

  • Protection of Buyer’s Rights

    If the buyers find any quality or structural defect in the property within five years from the date of possession, the builder is liable to rectify it within 30 days without charging anything extra. Apart from this, if there is a mismatch in the commitments made by the builder and the actual project, the buyer has the right to withdraw from the project and ask for a full refund of the amount paid by them till then.

    What is the Impact of RERA on Homebuyers?

    The implementation of the RERA Act has brought some radical transformations to ensure standardization, accountability, and transparency between homebuyers and developers. Below are the major upsides of this Act:

  • Increased Transparency

    Under the RERA Act, developers are mandated to disclose all project details on their websites, such as project layout, approvals, execution plan, stage-wise completion status, etc. All details of RERA-approved projects are also displayed on RERA’s official website.

  • Buyers’ Security

    For RERA-approved projects, developers are required to create reserve project accounts and park 70% of the funds received from buyers in those accounts. Such development provides a sense of security among the buyers, protecting them from the misuse of their funds by the builder.

  • Standardized Sales Agreement

    RERA benefits for homebuyers also include a standardized format for preparing sales agreements between buyers and promoters. This ensures that there are no one-sided clauses that can harm the buyers’ interests.

  • Penalty on Violations

    In case a builder or promoter fails to follow the RERA guidelines, it is required to pay a stiff penalty, which can be up to 10% of the total cost of the project. This ensures that they take the law seriously and follow RERA guidelines with due diligence.

What should you know about RERA act in the Different States?

As per the Real Estate (Regulation and Development) Act, every state and Union Territory (UT) in India needs to establish its RERA regulatory body. No builder or developer is allowed to market its project without seeking approval from their respective state’s RERA regulatory body. As per the latest information available from the Ministry of Housing and Urban Affairs, around 30 states and UTs in India have set up the RERA authority bodies under the RERA Act. Below are the RERA details of some major Indian states:

  • MahaRERA

    The Maharashtra Real Estate Regulatory Authority (MahaRERA) came into force on the 1st of May, 2017. It is a RERA regulatory body that handles RERA registrations and compliances in Maharashtra and UTs like Daman & Diu and Dadra & Nagar Haveli.

  • GujRERA

    The Gujarat Real Estate Regulatory Authority (GujRERA) also came into force on the 1st of May, 2017. It oversees and regulates the realty sector in Gujarat. As a buyer, you can check the details of the RERA-registered projects in Gujarat on the GujRERA website.

  • TNRERA

    The Tamil Nadu Real Estate Regulatory Authority (TNRERA) came into force on the 22nd of June, 2017. It oversees the implementation of the RERA guidelines and regulations in the Tamil Nadu state and the Andaman & Nicobar Islands.

  • UPRERA

    Uttar Pradesh was among the very first states to implement the rules of the RERA Act. The Uttar Pradesh Real Estate Regulatory Authority (UPRERA) was established in May 2016 under section 20 of the RERA Act. It streamlines real estate transactions and redresses the grievances of the residents of UP.

How to Register Under the RERA Act?

As per the RERA Act, all builders and developers are required to register their upcoming projects with their respective state’s RERA authority. The RERA registration process is the same across all states. Below are the steps one needs to follow to register a project under the RERA Act:

1

Account Opening

First, they need to open a bank account as specified under section 4 (2) (I) (D) of the Real Estate (Regulation and Development) Act.

2

Documentation

Next, they are required to collate and submit the essential documents required for RERA registration online.

3

Form Submission

Next, they need to submit a duly-filled Form A for RERA registration. Agents and promoters must submit Form B, defining their roles in the industry.

4

Fee Payment

Now, they need to pay the required RERA registration fee at the RERA website. This fee may vary from one state to another.

5

RERA ID Allocation

Post successful payment of the RERA registration fee, a unique RERA ID is allotted for the project. This RERA ID can be used to view any details about the project on the RERA website.

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What are the Documents Required for RERA Registration?

Following are the documents required for registering a project with the RERA authority:

  • PAN Card of the promoter and a copy of their Aadhaar Card
  • A passport-sized photograph of the promoter. If the promoter is a firm or a company, then the photographs of all founding members are required
  • Income Tax Returns (ITRs) of the promoter for the past three years 
  • Auditor Report, Balance Sheet, and Profit & Loss Statement of the promoter
  • Land Details (Legal Title Deed, Mortgage, Rights)
  • Project Details, including the layout plan and sanction plan
  • Details of the total number of apartments, their carpet areas, balconies, open terraces, etc.
  • Ownership Proofs (Sale Agreement, Proforma of Allotment Letter)
  • Authenticated Legal Title Deed or any other relevant document
  • Other RERA registration documents required by the respective state authority

How to Check if a Property is RERA-Compliant?

All builders and developers are required to register their properties under the RERA Act. Here’s how you can check if a property is RERA compliant or not:

  • All builders and developers must have the necessary consent and licenses before promoting a new project. You can check for these documents to ensure a property is RERA compliant
  • Real estate developers need to create a reserve account to save the funds deposited by the buyers of RERA-registered projects. You can check the proof of these accounts to make sure that the builder has registered its property with the applicable RERA authority
  • If the land area exceeds 500 square meters, the builder is required to take approval from the RERA authority before advertising any property built on that land.

Besides, you can visit the property’s website to check for the RERA registration ID. You can enter this ID on the official RERA website to get the details of the project.

Tax Savings under RERA Act

Your home loan EMIs comprise two components - principal and interest. To encourage you to make investments in properties, the Government of India offers certain tax benefits under various sections of the Income Tax Act of 1961. These benefits are offered against the principal and interest components of your home loan EMIs. 

Below are the tax benefits available for home loan borrowers in India:

  • Section 80C

    • Under Section 80C of the Income Tax Act, you can claim tax deductions against the principal component of your home loan EMIs. However, this deduction can be claimed only if you are repaying a home loan for a self-occupied property. The maximum tax deduction available under this section in a financial year is Rs. 1.5 lakh.

  • Section 24

Under Section 24 of the Income Tax Act, you can claim tax deductions against the interest component of your home loan EMIs. The maximum deduction allowed under this section in a financial year is Rs. 2 lakh. Again, you can claim this deduction if you are repaying a home loan for a self-occupied property. 

Another important condition to avail of the tax benefits mentioned above is that the construction of your house must be complete. It means that these benefits are available only after the construction of an under-construction property gets complete or if you have purchased a ready-to-move-in property.

In addition to these, tax benefits under section 24 can be claimed only if the construction of your house has been completed within five years. In case the construction of your house takes more than five years to complete, you can claim a maximum of Rs. 30,000 only as a tax deduction against the repayment of the interest component of your home loan.

Investing in these projects can be an excellent way to ensure tax savings under sections 80C and 24. One of the advantages of RERA-registered projects is that you can rest assured of their timely construction. But in case the construction of a RERA project takes more than five years and you lose out on the potential tax savings, the builder of the project will be liable to pay for your losses as per the Act. 

Let’s understand tax savings under these projects with the help of an example. Suppose you have taken a home loan of Rs. 80 lakh at 9% interest per annum for a tenure of 20 years. It means that the total interest that you have to pay on your home loan would be Rs. 93 lakh (approximately), and the maximum tax savings you can make under section 24 would be Rs. 40 lakh (approximately).

However, if your builder fails to complete the construction of your property within five years, you would be able to claim a maximum tax benefit of Rs. 6 lakh in 20 years. The difference of Rs. 34 lakh that you can't receive due to the delay in construction will be paid to you by your builder. 

What are the Penalties Under the RERA Act?

Strict penalties are imposed on builders/promoters and real estate agents for the violation of the RERA Act. The offenses and penalties are described in Sections 59 to 72 of Chapter VIII of this Act. 

Below are the penalties imposed on builders or promoters under the RERA Act:

Offense Penalty
Non-registration of a project Up to 10% of the estimated cost of the project
Providing false information about the project Up to 5% of the estimated cost of the project
Violation of laws Either 10% of the estimated project cost or imprisonment for up to three years
Severe non-compliance with RERA The daily penalty of up to 5% of the estimated project cost

Below are the RERA penalties imposed on real estate agents:

 

Offense Penalty
Promoting a non-registered project Rs. 10,000 per day for default
Non-compliance with the Appellate Tribunal Charged 10% of the estimated project cost or up to one-year imprisonment

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Popular FAQs

What are the eligibility criteria to get a RERA-compliant home loan?

All builders and developers in India must register their projects under the Real Estate Regulatory and Development Act. You can check if your project is RERA-registered or not by visiting the official website. At Tata Capital, we provide home loans for such projects with simple eligibility criteria.

Below are the requirements you need to fulfill to get a home loan for RERA projects:

    • You need to be a citizen of India
    • Your age should be between 24 and 65 years
    • You must have a minimum salary of Rs. 30,000 if you are a salaried employee
    • You must have a business experience of three years if you are a self-employed individual


    To know your exact eligibility, you can use our home loan eligibility calculator.

What is the maximum home loan that one can avail of for buying RERA projects?

The maximum home loan amount that you can borrow from a lender depends on several factors, including your age, employment status, monthly income, credit score, and the cost of the property you are buying. With Tata Capital, you can get a home loan of up to Rs. 5 crore for buying a housing property in any of these projects across India. We provide financing of up to 80% of the property’s market value.

What is the interest rate on home loans taken for RERA projects?

The interest rates levied on home loans in India vary from one lending institution to another. It usually ranges between 10% and 13%. At Tata Capital, we provide easy home loans for RERA projects at highly competitive interest rates, starting from just 8.75%* per annum. Furthermore, you can get the best deal on home loan interest with us based on your age, employment status, monthly income, and credit score. 

What is the repayment tenure for home loans taken for RERA projects?

The repayment tenure of your home loan is the period for which it is taken. The higher your home loan repayment tenure is, the lower will be your home loan EMIs. Usually, the repayment tenure of a home loan range between 15 and 20 years in India. At Tata Capital, we provide home loans for RERA projects with flexible repayment tenures that can go as high as 30 years. 

What is the role of RERA in regulating the real estate sector in India?

The Real Estate Regulation and Development Act has transformed the Indian real estate industry. Since its inception in 2016, it has brought a flurry of improvements in this sector, such as better fraud protection, enhanced transparency, timely delivery of projects, and prevention of misuse of funds. All builders and developers in India are mandated to register their projects under the Act. Here are a few advantages of the act that have helped the real estate sector:

    • These projects are required to maintain a standard method for calculating carpet areas of properties
    • As per the Act, no developer can ask for more than 10% of the property’s cost as advance payment
    • If a builder fails to complete the construction of its project within the due date, it may have to pay a penalty to the buyer
    • Developers are mandated to disclose all details of their projects on the official website
    • Developers are required to create a separate reserve account for a project and park 70% of the funds received from the buyers in it
    • Homebuyers can take the grievances with the official authorities, and they will be resolved within 30 days
    • The builder is liable to rectify any structural defects in a property found within five years of construction at its own cost 


    All these rules have helped in the tight regulation of the Indian real estate industry.

What are the advantages of taking a home loan for RERA projects?

Investing in such projects has several benefits. You can enjoy complete transparency about the project’s construction and other details. Moreover, you can get a home loan for buying a property in a RERA-registered project with minimal documentation and at highly competitive interest rates. You will also be able to claim certain tax benefits on your home loan.

How does the RERA compliance of a project impact the home loan approval process?

Lenders usually provide home loans for RERA-compliant projects with simple eligibility criteria and minimal documentation. Additionally, it eliminates the need for lenders to conduct hard verification of a property, and as a result, they can approve home loans quickly.

How does RERA compliance ensure transparency and protection for homebuyers?

The implementation of the Act has ensured increased transparency in the real estate sector and the protection of homebuyers’ rights. As per this Act, all developers are mandated to disclose all relevant information about their projects, including the project layout, number of flats or apartments, carpet areas of different flats, and construction status, on the official website. 

Additionally, the acts ensures that the developers provide timely possession of properties to homebuyers as per the sale agreements. In case a developer fails to provide timely possession, it may have to pay a penalty in the form of interest to the buyer. Homebuyers can even seek compensation from the developer for any losses suffered due to the delay in construction.

Last but not least, the act ensures an effective grievance redressal mechanism for homebuyers seeking solutions to disputes or grievances with builders.

What is the difference between a RERA-compliant loan and a non-RERA-compliant loan?

Most lending institutions in India now provide home loans for RERA-compliant projects only. Such home loans usually come with simple eligibility requirements and affordable interest rates. On the other hand, providing a home loan for non -compliant properties is illegal. So, if your builder hasn’t yet registered their property under the Act, you must ask them to do so at the earliest.

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