RERA Act Advantages and Disadvantages Explained

• Dec 10, 2025

If you were buying a small flat in 2012, waiting for possession felt like waiting for a bus without a timetable. RERA, when it came, was the first time people could tell builders to put everything on record, show customers the drawings of the building, commit specific dates or pay up.

So in more than one way, RERA changed the ground.

But like everything in construction, it wasn’t a clean cut. The law fixed some old leaks, and it also created a new kind of paperwork for everyone. While buyers feel safe with RERA, small builders often struggle with compliance. But the big builders treat RERA like a badge.

Let us explain is RERA good or bad for buyers and its impact on the real estate business.

Why RERA Was Needed?  

Before RERA, real estate in India was like building a wall without a plumb line. It might stand for a few years, but the day you check the level, you know something is off.

• Delays everywhere
  If you ever chased a builder for possession before 2016, you know the drill. Every quarter, the date moved for one reason or the other.

• Misleading carpet area
  Some developers used a creative math that only worked in brochures.
  A 900 sq.ft carpet area used to be shown as 1,350 sq.ft  super built-up by counting the staircase, lobby, or  even the guard’s chair.

• Money moving from one project to another
  This was the worst sin in the business. Buy a flat in Tower A, your money quietly walked to Tower D or to a new plot five kilometres away.

• No single rule book
  States had different habits. Local bodies had their own mood. Buyers had almost nothing except a thick file and hope.

So when RERA Act 2016 arrived, it forced registration of projects, agent licensing, escrow accounts, clear definition of carpet area, strict timelines, disclosures on the state RERA portals, and a place where a normal buyer could complain without being drowned in legal English. It wasn’t perfect on all counts but it changed the atmosphere.

Major benefits of RERA Act for homebuyers

Let’s explain what actually improved, and how it feels on the ground.

1. Transparency: You can finally see everything

Under RERA, a buyer can open the state portal and see a project like someone looking through clean glass:

approvals

sanctioned plans

carpet area

construction schedule

promised possession date

quarterly progress updates

financials (to an extent)

Earlier, all this sat in a dusty office drawer. Today, it requires just one click. This changed the negotiation. Builders can’t sell dreams with just 3D renderings anymore. If they claim a timeline, it sits on a government website with a date stamp.

2. Timely Delivery: The calendar has teeth

Builders now sign a possession date, not a wish list.

If they don’t deliver:

• Penalty applies, OR
• Refund rights exist, OR
• Interest compensation kicks in

It forced developers to calculate timelines realistically and on site, you can feel how the planning gets tighter.

3. Carpet Area: Honest numbers for apartment area

RERA cleaned up one nasty thing called  inflated areas. Carpet area is now defined and shows actual numbers.

No more staircase, corridor, lift shaft sneaking into the  space you are paying for. If a brochure still tries that old stunt, buyers can drag the builder to the authority and builders know that. So marketing got disciplined.

4. Escrow: Your money can’t go wandering

This is the backbone of the whole act. 70% of the money collected from buyers goes into a project-specific escrow account.

Withdrawals happen only after certification and only for that project. So if you book a flat in Tower A, your money must stay loyal to Tower A.

Earlier, it worked like domino financing. Project A funded Project B. Project B funded the land for Project C. When the chain broke, buyers started feeling the pain. RERA put this in order.

5. Buyer Protection is real, not decorative

RERA introduced defect liability for structural issues and the protection is valid for five years.

If the wall cracks, if plumbing fails, if tiles pop like popcorn, the builder can’t hide.

Your agreement now gives protection by holding the builder accountable. And if things go completely south, the buyer can seek refund and penalty through the tribunal. Not through a 10-year court marathon.

6. Market reputation grew up

Once RERA portals opened and cases started getting reported publicly, developers realized that Google remembers everything and so they instead took measures to build their reputation. 

A developer with five penalty orders on a state portal looks naked in front of a buyer. Institutional investors look at those records too and money prefers clean reputation.

So the good builders received more favors from the market, and the shaky ones either improved or started shrinking.

Drawbacks of RERA Act India 

Now let’s shed some lights on the downsides that nobody prints on banners. 

1. Compliance is heavy: someone pays the bill

For a small builder, RERA compliance feels like carrying a cement bag on one shoulder and a file full of NOCs on the other.

Audits, quarterly updates, escrow discipline, egistration fees, architect certificates, the list goes on and on. 

All look good in theory, but the cost of staying compliant does not disappear. Eventually, the buyer pays it through the property price. Developers don’t cut their profit dreams easily.

So yes, home prices ticked upward, partly because the law increased structure and paperwork.

2. Approvals slowed down

To launch a project, builders now need a clean stack of approvals. The government says that the timelines are faster, but on the ground, not always.

A small glitch in a drawing, one missing signature from an electricity office or a delayed environmental clearance, the whole machine stops.

Earlier, builders launched early and fixed approvals while selling. Now they must finish homework first. While this is good for buyers, it is detrimental for market speed.

3. Not every project is covered

This is the blind spot most buyers don’t see.

• Some small projects slip outside threshold rules.
• Many ongoing projects when RERA came were given partial protection.
• Some state variations mean not everything is uniform.

So a buyer may think RERA protects them, when the project is actually outside the fence.

4. States implement it differently

RERA is a central law, but implemented by state authorities.

That means:

• Some states are strict
• Some are more lenient
• Some have digital platforms that work beautifully
• Others are time-consuming for the paperwork 

So your RERA experience depends on your state’s attitude towards real estate discipline.

5. Tribunals are overworked

On paper, RERA promises fast dispute resolution.

In reality, in busy markets:

• Filings often pile up
• Benches got overloaded
• Timelines are stretched

So yes, you can file a case. But don’t expect justice as sooner as it is promised. 

6. Small developers took the punch

Big developers have teams for legal, finance, compliance, and project management. They use RERA as a badge to showcase integrity and transparency to their buyers

Small developers, who build 20 flats on ancestral land often struggle. Many such small builders vanished from the market, while many of them merged with biggies. Some also have shut their projects, scared of penalties. This reduced the supply in lower-cost segment, especially in Tier-2 cities.

So ironically, RERA protected buyers, but also made houses harder to build cheaply in some areas.

Who Benefits & Who Gets the Heat

As we have discussed already, the scale of impact goes from positive to negative with multiple a variety of denominations. Let’s see who won due to RERA, who are in the mid point with no adverse or positive impact and lastly, who are affected the most. 

Winners

• Buyers who want safety and clarity
• Big developers hungry for clean image
• Institutional investors
• NRIs scared of Indian paperwork
• Banks who like clean escrow chains

Neutral / Mixed

• Mid-size developers compliance hurts, but reputation helps
• End-users in metros prices rise, but risk falls

Affected

• Small builders
• Buyers who wanted cheaper homes from small developers
• Old ongoing projects,  stuck between old habits and new law

What Buyers Must Check

Even with RERA, don’t switch off your brain as a buyer, Here is a checklist to help you. 

1. Check if the project is registered

Sometimes the glossy brochure hides the raw fact that the registration pending. If it’s not on the portal, it’s not RERA.

2. Look for updated disclosures

A lazy builder can register and then forget the quarterly updates. If the portal looks frozen, that’s a tell-tale sign.

3. Don’t assume RERA covers old sins

A project launched in 2013 won’t magically become a 2025 clean-sheet project. So check the track record of builders as well. 

4. Grievance redressal speed varies

Check local cases and find the redressal speed. How long did decisions take in your city? That brings a lot of transparency than reading the law.

5. Trust the portal, not the salesman

On site, every builder and its marketing team promise heaven. But on the portal, only facts show up. So, check the portal before booking any property. 

FAQs

What exactly does RERA protect?

RERA protects a buyer on two fronts, information and money.

Before the Act, most of what you knew about a project came from the brochure and the sales office. You trusted the date because you liked the site supervisor’s confidence. If the project slipped by one year, you argued emotionally.

After RERA, builders must file everything officially on the state portal with drawings, approvals, promised possession date, carpet area, and construction updates. So if a builder commits December 2026 on record, and they deliver in April 2027, the law isn’t confused. The buyer is entitled to interest compensation or refund options. That’s the first layer.

The second layer is defect liability. For five years after possession, if something goes wrong structurally such as slab cracks, major water leakage, or tile popping because of poor bedding, the builder must fix it, not blame the subcontractor.

Is RERA mandatory for every project or builder?

In most states, yes, if the project crosses a minimum size or number threshold. You’ll hear a number like 500 sq.m or 8 flats, but each state draws this line slightly differently. A big township is obviously under RERA. A small three-floor project on ancestral land might slip outside if the state rules allow that.

Registration means giving data to the authority, creating an escrow account, updating progress quarterly, and keeping all promises in writing.

If a builder is refusing RERA registration even when the project clearly qualifies, that is a red flag the size of a tower crane.

Does RERA apply to old projects that started before the Act?

This is a grey zone for many buyers.

Ongoing projects around the 2016 rollout faced a question: should they start following RERA mid-way? Some states pulled them into the Act depending on their stage of completion. Others allowed partial coverage. A few gave the builder the option to register voluntarily to build trust.

So don’t assume an old delayed project suddenly becomes clean just because RERA exists. You have to check the specific listing on the state’s portal. If it’s registered, you’ll see documents and timelines. If not, you’re still under the old conditions and the agreement you signed earlier is the rulebook.

Will RERA guarantee there are no delays or price hikes?

No law can fight weather, supply-chain issues, or approvals stuck between multiple departments. But the difference is that before RERA, delay was normal, and builders didn’t feel pain. After RERA, delay costs money in the form of interest compensation.

So developers calculate more honestly. They don’t promise 18 months if they know approvals alone will take 8.

On the pricing side, compliance cost doesn’t vanish. RERA added structure, audits, certifications, and reporting. So yes, that cost pushes prices a bit upward, especially for small builders.

In return, buyers get a home that’s legally clean, with a proper carpet area and a firm possession date. Think of it like steel: cheaper without testing, safer with testing.

What happens if a builder violates RERA rules?

If a builder fails to follow what they registered and the buyer faces delays, wrong area, poor quality, and misleading ads, he has a clear complaint path.

First the complaint goes to the state RERA authority for resolution. If that doesn’t solve it, it goes to the RERA Appellate Tribunal.

Penalties can include the following:

• Refund of the buyer’s money
• Interest compensation
• Fines
• Orders to correct the fault
• In extreme cases, cancellation of registration

The biggest punishment today isn’t just legal, it’s public listing. Once a builder gets a penalty order on the portal, that record lives online. Future customers, banks and investors can see it.

How to check if a property is RERA-registered?

Go to the state RERA website. Every state has its own portal. Search the project name, the builder name, or even the plot number if the builder has played innovative games with naming.

If it’s registered, you’ll find a project page with PDFs, dates, drawings, quarterly updates. If you only find glossy ads and no registration ID, then the builder is selling a dream, not a registered promise.

Does RERA cover commercial real estate too?

In most states, yes. Office spaces, shops, mixed-use developments, these fall under RERA if they meet the size criteria. Just remember, RERA was born from housing pains, so commercial application can sometimes feel like a tight shirt on a bigger body.

Still, the core principles such as registration, escrow, disclosures, and timelines apply. 

Ending Notes

The RERA Act changed Indian real estate more than any policy in recent decades. Its biggest contribution wasn’t the paperwork or the definitions; it was trust built into the process. For the first time, a buyer can see approvals, drawings, promised dates, and progress on a government platform instead of depending on sales talk.

As most homebuyers put their lifetime savings into one property, the shift from uncertainty to a documented commitment is the biggest change the sector needs.