Why RERA Registration Is Important?

The introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA) marked one of the most significant reforms in India’s real estate sector. Before RERA, buyers often faced delays, lack of transparency, changes in project specifications, and limited legal recourse. RERA was designed to correct these structural issues by bringing accountability, transparency, and standardisation to the sector.

At the centre of this reform lies RERA registration. Understanding why it matters is essential for anyone buying, investing in, or even marketing real estate in India.

What Is RERA Registration?

RERA registration is a mandatory approval that real estate projects and promoters must obtain from the respective State Real Estate Regulatory Authority before advertising, selling, or booking properties. The requirement applies to residential and commercial projects that exceed a specified land area or number of apartments, with certain limited exemptions defined by law.

Once registered, the project details are uploaded on the state RERA portal and made publicly accessible. This creates a verified information repository that buyers can rely on before committing funds.

Transparency in Project Information

One of the biggest reasons RERA registration is important is transparency. Developers are required to disclose detailed and verified information, including land title status, approvals, sanctioned plans, layout, carpet area, project timeline, and contractor details.

This disclosure reduces information asymmetry between developers and buyers. Instead of relying on brochures or verbal assurances, buyers can independently verify project details on the RERA website. Any misrepresentation or deviation from disclosed information can attract penalties.

Protection Against Project Delays

Project delays were historically one of the most common issues faced by homebuyers. RERA directly addresses this problem by making developers legally accountable for delivery timelines.

Registered projects must declare a completion date, and failure to meet it can result in penalties and compensation to buyers. In many states, buyers are entitled to interest for delayed possession, calculated at a rate linked to the State Bank of India’s benchmark lending rate.

This provision shifts project delay risk from buyers to developers, creating stronger incentives for timely execution.

Financial Discipline Through Escrow Mechanism

RERA mandates that developers deposit at least 70 percent of the funds collected from buyers into a dedicated escrow account. These funds can only be used for the construction and land costs of that specific project.

This provision prevents diversion of funds to other projects, a major cause of stalled developments in the past. For buyers and investors, this significantly reduces execution risk and improves confidence that the money paid is actually being used to build the promised project.

Standardisation of Carpet Area and Pricing

Before RERA, developers often quoted super built-up area or other inflated measurements, making price comparisons difficult. RERA standardised the definition of carpet area, which now forms the basis for pricing and sale agreements.

This change ensures that buyers pay only for usable space and can accurately compare prices across projects. It also reduces disputes arising from discrepancies in delivered area versus promised area.

Legal Recourse and Dispute Resolution

RERA provides a dedicated dispute resolution framework through Real Estate Regulatory Authorities and Appellate Tribunals in each state. Buyers no longer need to rely solely on consumer courts or civil litigation, which can be time-consuming.

Complaints related to delays, false advertising, changes in plans, or violations of the Act can be filed directly with RERA. Authorities have the power to impose penalties, order refunds, and even revoke project registrations in serious cases.

This creates a more accessible and time-bound grievance redressal mechanism.

Accountability for Developers and Agents

RERA registration is not limited to projects alone. Real estate agents must also register with RERA to legally facilitate sales in registered projects. This brings accountability to intermediaries who previously operated with little oversight.

For developers, non-compliance can lead to significant penalties, including fines of up to 10 percent of the project cost and imprisonment in extreme cases. These consequences act as a strong deterrent against unethical practices.

Improved Buyer Confidence and Market Discipline

From an investor’s perspective, RERA registration has played a key role in restoring confidence in the real estate sector. The Act has weeded out weaker or speculative developers, leaving the market increasingly dominated by financially stronger and compliant players.

As a result, RERA-compliant projects tend to enjoy better buyer trust, smoother financing access, and stronger resale demand compared to unregistered or non-compliant developments.

Importance for Investors and Lenders

For investors, RERA registration reduces regulatory and execution risk, making real estate a more predictable asset class. For banks and financial institutions, RERA compliance is often a prerequisite for project funding and home loan approvals.

This alignment between regulation and finance further reinforces discipline across the sector and improves overall market stability.

What RERA Registration Does Not Guarantee

While RERA significantly improves transparency and accountability, it does not guarantee appreciation, eliminate market risk, or ensure developer profitability. Buyers must still assess location, pricing, demand dynamics, and developer track record.

RERA should be viewed as a risk-reduction framework, not a substitute for due diligence.