Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
Real Estate Act Comes in to Force
May 04, 2016

The Real Estate (Regulation and Development) Act, 2016 comes into force from May 1, setting in motion the process of making necessary operational rules and creation of institutional infrastructure for protecting the interests of consumers and promoting the growth of real estate sector in an environment of trust, confidence, credible transactions and efficient and time bound execution of projects.

Key Features

  • 69 of the total 92 sections of the act have been notified, bringing the Act into force culminating the eight year long efforts in this regard.

  • A proposal for a law for Real Estate was first mooted at the National Conference of Housing Ministers of States and Union Territories in January, 2009.

  • Rules under the Act have to be formulated by the Central and State Governments within a maximum period of six months i.e. by October 31 under Section 84 of the Act.

  • Ministry of HUPA would make Rules for Union Territories without legislatures while the Ministry of Urban Development would do so for Delhi. Section 84 of the Act stipulates that the appropriate Government shall, within a period of six months of the commencement of this Act, by notification, make rules for carrying out the provisions of this Act.

  • Early setting up of Real Estate Regulatory Authorities with whom all real estate projects have to be registered and Appellate Tribunals for adjudication of disputes is the key for providing early relief and protection to the large number of buyers of properties.

  • Section 20 of the Act says, the appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification establish an authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act. These Authorities decide on the complaints of buyers and developers in 60 days time.

  • Section 20 of this Act also empowers appropriate Governments to designate any officer preferably Secretary of the Department dealing with Housing, as the interim Regulatory Authority until the establishment of Regulatory Authority under the provisions of the Act.

  • Regulatory Authorities, upon their constitution get three months time to formulate regulations concerning their day-to-day functioning under Section 85 of the Act.

  • Likewise, under Section 43 of the Act, Real Estate Appellate Tribunals shall be formed within a maximum period of one year i.e by April 30, 2017. These fast track Tribunals shall decide on the disputes over the orders of Regulatory Authorities in 60 days time.

  • The remaining 22 Sections to be notified relate to functions and duties of promoters, rights and duties of allottees, prior registration of real estate projects with Real Estate Regulatory Authorities, recovery of interest on penalties, enforcement of orders, offences, penalties and adjudication, taking cognizance of offences etc.

Benefits to Property Buyers

A survey by the Ministry of Consumer Affairs, dubbed real estate sector as the second worst industry after telecom in terms of quality of service. The prevailing liquidity crisis, unaffordable property prices, high delivery defaults, tepid sales and low investor confidence has plunged the sector into crisis.

In this backdrop, the consumer-friendly landmark legislation is aimed at setting up regulatory and redressal mechanism, the absence of which is responsible for the present mess in the real estate.

Key Provisions of the Act

  • Mandatory registration of projects

  • Need to provide complete information on project plan, lay-out, approvals, land title
  • Also required is completion schedule, with ban on pre-launch advertising without sanctions

  • Mandatory disclosures in ads and prospectus to check gap between promise and delivery

  • Sale of property only on the basis of clearly defined carpet area

  • Move to ensure buyers get exactly the space for which payment is made

  • Mandatory escrow account to check diversion of funds that delay projects

  • Provisioning of fair compensation for delays in delivery

  • Focus also on quality of construction, speedy dispute resolutions

  • Also proposed penalty and imprisonment for non-complying developers

Though this model legislation covers both residential and commercial real estate including ongoing projects, yet it's the residential real estate which is going to get big boost, especially by boosting the confidence of home buyers.


Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.