In March 2016, the Parliament of India passed a new law that would give greater protections to people buying new homes from developers. This historic development has significant implications for the new build property market in India, which will likely see a power shift away from unscrupulous developers. We explain more here about the Real Estate Regulation Act and what it could mean for the future.

Real Estate Regulation


Previously, scandals have occurred whereby developers had sold property ‘off plan’ to the public, and then not completed – or substantially delayed – the project. There have been incidents where the money paid by homebuyers has been spent before completion of the building project, either as a result of corruption or simply incompetence. It has been reported that a lack of transparency with regards to sales agreements, and oversight on the part of public authorities, enabled these problems to occur.


But now, any person developing land in excess of 500 square meters is required – under RERA – to register with an appropriate regulator. Until they have done this, they cannot advertise their project or launch its delivery. The penalties for individuals that don’t comply are strong, with imprisonment for up to three years on the cards. Some may be more concerned about the financial risks of non-compliance, and RERA enables authorities to fine a developer up to 10% of their total project cost if they do not adhere to the new rules. Tribunals will be used to sort out disputes, saving costs and making the process of redress easier for the public to access.

Builders are set to benefit too, with tribunals having the power to hear complaints against purchasers. They will be expected to continue to look after the structure of a new building for at least five years after its completion.


There have already been challenges in the implementation of RERA, with the majority of the Indian states and territories being slow to implement the changes. Local bureaucracies seem to be struggling to make the required notifications and to set up a regulator body that will monitor new building projects.


Commentators have spoken of the effect that the new rules could have on the housing market in India. Popular theories include the expectation that housing prices will stabilize, that there will be an increase in demand for new build purchases, and growth in the real estate development market. All of this depends on the regulations being successful in weeding out unscrupulous developers and ensuring the confidence of consumers.


India’s previously unregulated real estate market has seen a landmark shift in its structure and outlook. It is a pioneer internationally in focusing on developers. There can be no going back once market instruments like this have been introduced, and it remains to be seen whether the impact will be one of greater security and freedom to trade, or whether increased bureaucracy and structural changes will get in the way of lawmakers’ desire to build a new market landscape.