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In this blogpost, Komal Rastogi, Student, Nirma University, Ahamadabad, writes about the advantages and disadvantages of the Real Estate (Regulatory And Development) Bill, 2016.

“India faces a severe housing shortage and on the other hand, buyers are put off by sky-high Real Estate prices and the unscrupulous practices of many developers.”[1] The Real Estate was largely the concern of State institutions till the 1980s because private promoters were very few. “With the liberalization of the economy, conscious encouragement was given to the growth of the private sector in construction, with a great deal of success, and the sector today is estimated to contribute substantially to the country’s GDP.”[2] Presently, the condition of Real Estate and the housing sector is at its worst because it is highly unregulated and opaque as it lacks transparency.

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 Notwithstanding government’s effort, people, are still homeless. Private parties took advantage of this scenario and have been ruling the real estate business since then, which eventually much to people’s disappointment led to high rates of the estate, no proper information about the builders, etc.[3] The other problem which the buyers encounter is regarding the lack of remedies available to them. They are compelled to knock on each possible door for some relief. So far, the buyers were coerced to consent to single sided contract terms as created by their builders because they did not have any other options.[4] To overcome this unscrupulous condition, the need for a Bill concerning real estate was felt and thus, for the first time; the Real Estate (Regulatory and Development) Bill was introduced in Rajya Sabha in the year 2013.[5] This Bill was referred to a ’21- Member Committee’.

Real Estate is a term which comprises not only of land and buildings on it but also of the natural resources of the land which is inclusive of its flora, fauna, crops and minerals.[6] It comprises of three main categories: 1) Residential 2) Commercial and 3) Industrial. The Residential Real Estate includes housing, condominiums, townhomes and undeveloped land.[7] The Commercial, on the other hand, includes offices, warehouses, etc., and the Industrial Real Estate includes factories, mines and farms.[8]

“An official of Ministry of Urban Development said that the industry figures revealed that the Residential realty market alone sees an annual investment of Rs 3.50 lakh crore and about 10 lakh new home buyers every year.”[9] “There are 17,000 real estate projects that are in progress in 26 major urban agglomerations in the country which would come under the domain of the proposed Bill.”[10]

The core aim of the Real Estate (Regulation and Development) Bill, 2013 was to protect the interest of the buyers and to promote fair play in Real Estate markets.[11] This Bill had been introduced mainly to reach the objective of Government of India to provide “Housing for All by 2022.”[12] The measures in the Bill were propounded with the aim to boost the domestic as well as foreign investment in the sector.[13]

The Real Estate Bill 2013, first and foremost ensured the formation of Real Estate Regulatory Authority (RERA). This body was created for the registration of Real Estate agents and their subsequent projects.[14] This Bill outlines the duties of developers, buyers and agents in the Residential Real Estate sector.  It also stipulates:

  • Uniform regulatory environment in this sector,[15]
  • Genuine contract between buyers and promoters of Residential Real Estate projects[16]
  • Developers are barred from booking or offering the projects of Residential Real Estate for sale without registering them in RERA,[17]
  • The information of promoter should be uploaded with the details of above mentioned point in the website of RERA,[18]
  • 50% or less of the money paid by the buyer should be maintained in a separate bank for the construction of the project,[19]
  • The framework must have written agreement with completion certificate and payments.[20]
  • A Tribunal of Real Estate was to be devised so that the decisions of RERA could be appealed.[21]
  • Setting up of the Central Advisory Council.[22]
  • The regulatory authority had the power to set rules and regulations[23]

The main purpose of the Bill is to restore the confidence of the people in the Real Estate zone by introducing transparency and accountability in the housing markets.[24] It will help in accessing the financial and capital markets in the long term goals. “The Bill will promote orderly growth through consequent efficient project execution, professionalism and standardization.”[25] Along with guaranteeing speedy trials of disputes and growth to the sector, “it also ensured to curb corruption and use of black money in the real estate market, the Bill will include some provisions which will help in tracking down innumerable sources of black money which currently costs the government Billions of rupees in lost taxable income.”[26]

Drawbacks of the Real Estate (Regulatory And Development) Bill, 2013

Following are the setbacks of the said Bill:

  1. It does not enumerate any difference between the Residential Real Estate and Commercial Real Estate.[27]
  2. Some projects in the Real Estate with certain investors or stakeholders do not come under the category of this Bill.[28] They are:
  • “Government agencies/authorities at Centre, State and Municipal level;[29]
  • Financing agencies like Bank/Financial Institutions[30]
  • Brokers, Underwriters and Bulk Purchasers”[31]
  1. It also does not provide any tool for transferring the booking during the construction time[32]
  2. It fails to provide any additional securities for the retail purchasers[33]

Amendments to the bill of Real Estate, 2013

  1. Establishment of Real Estate Regulatory Authority: Formation of the body called Real Estate Regulatory Authority in States as well as Union Territories to regulate Real Estate projects[34]
  2. Discrimination: There will be no discrimination based on caste, religion, creed, sex, or gender. The government may bring a non-discriminatory clause to allow anyone to buy a property in complex even a transgender.[35]
  3. Applicability of the Bill: The Bill introduced in 2013 was applicable only to the Residential Real Estate. Now, it is proposed to cover both Residential as well as Commercial Real Estate.[36] “Getamber Anand, National President of the Confederation of Real Estate Developers’ Associations of India (CREDAI), said while builders welcome the changes, the Bill should not be retrospective in nature as it would lead to a lot of confusion and delays.”[37] He also said that Commercial Real Estate should be kept out of the ambit of the regulator.
  4. Registration: Previously, the developers had to register the Residential projects if the project was greater than 1000 sq. m. and had more than 10 apartments.[38] But according to the recommendation, “projects on at least 500 sq. m. of the area or with 8 flats also have to be registered to the regulatory authority.”[39] It includes registration of Real Estate projects and agents along with the disclosure of all registered projects as well as the details of the project, layout plan, etc., the authority.[40]
  5. Refund of Money in Case of Misleading Advertisements: Incorrect information, the false statement contained in the notice, the advertisement may lead to reimbursement of the money to the buyer.[41]
  6. Compulsory Deposit of at least 70% of the Total Cost of the Estate: The amended Bill makes it compulsory for the buyers to deposit 70% or more of the total cost of the estate which includes land and construction cost. Earlier, only 50% or less was the required to be deposited.[42] This 70% of the money should be deposited in another bank account and should be only for the above-mentioned
  7. Builders are Restricted from Taking More than 10% Advance Without a Written Agreement: “A builder will not be able to take more than 10% advance money from buyers without a written agreement. Right now, a lot of dealings happen by paying huge advances and the agreement part is delayed by many.”[43]
  8. Structural Defects: It is suggested that builders will be liable for structural defects with imprisonment of five years which is more than the earlier prescribed punishment of two years. [44]In such cases, the jail term is that of one year or five per cent of the apartment cost or both. Other pro-developer measures include single window clearance and digitisation of land records.”[45]
  9. Sale of Property as per Prices Linked with Carpet Area[46]: Carpet area is the area which includes usable spaces like kitchen and toilets, and it should be clearly defined to impart clarity which earlier was not the case.[47]
  10. Resident association: “Formation of resident association has been made compulsory within 3 months of the allotment of the majority of the units in the project so that buyers get to utilize facilities such as common hall, club house, reading room,”[48]
  11. Payment of Interest: Builders have to pay interest if there is any delay or default in the home at the same rate as they charge the home buyers.[49]
  12. Consumer Courts: the aggrieved customers can now approach to any consumer court at the district level also instead of the regulatory body given in the Real Estate Bill of 2013.[50] This Bill also established a fast track dispute resolution mechanism which would solve the disputes within sixty days through appellant tribunal against ninety days earlier proposed.
  13. Notification for the Act: now the “State has to make rules within six months of notification of the proposed Act instead of one year, and the allottees shall take the possession of house within two months of issuance of occupancy certificate.”[51]
  14. Additional Benches of the appellate tribunal: For the speedy adjudication of grievances, an additional bench of the appellate tribunal can be made in a state.[52]
  15. Punishment: For promoters, three years of punishment and for agents one year of punishment has been prescribed for the violation of the orders of the appellate tribunal.
  16. Punitive Provisions: “Punitive provisions including de-registration of the project and penalties in case of contravention of provisions of the Bill or the orders of the Authority or Tribunal.”[53]
  17. The Bill looks to set up administrative bodies at the Central and state level for responsible and transparent business practices.[54]

The news of the Bill changing to an Act will be a sign of relief to the home buyers who have suffered from huge losses, delays in delivery of their projects by developers, and discrepancy in the fulfillment of promises made to them at the time of booking. The changes that have been inserted in the Bill have been widely accepted by the industrial players.

Specialists say that the improvement is sure and subsequently is a step closer towards setting up of a land regulation in India. Om Ahuja, the CEO, Residential Services of JLL India stated that “If the Real Estate Regulatory Bill comes in 2015, it will be the biggest thing for the sector as it will provide protection to home buyers and it will also result in some non-credible players exiting the sector because of the checks and balances that will come in place”[55]

Benefit to the builders

Builders have also been provided with advantages in this Bill 2015. The prime advantage given to the builders by legislation is that they can also impose a penalty on the allottees for not paying the dues on time.[56] In the case of any conflicts with buyers, builders also have the opportunity to approach to the regulator.[57]

Although the Bill has some benefits for builders, it is the builders only who have to pay high amount imposition of the Bill on them. “The Bill provides for a penalty, up to 10 percent of the total project cost or even imprisonment, if builders do not honor their commitment or fail to register themselves with the regulator.”[58]


The Real Estate (Regulatory and Development) Bill, 2013 was introduced in Rajya Sabha and was referred to Standing Committee on Urban Development for examination by the Speaker of Lok Sabha.[59] The Bill has been amended by the government numerous times. The amendments revolving around both Residential Real Estate and Commercial Real Estate must necessarily be taken into consideration and punishment to the developers, etc. should be deliberated upon. In 2015, the Union Cabinet gave the permission to amend the Real Estate (Regulation and Development) Bill. Finally, after the effect of umpteen minds, the Bill had been approved by the Prime Minister, Narendra Modi, was passed by the Rajya Sabha on 10th March and subsequently by Lok Sabha on 15th March, 2016.[60]


  • Online websites:

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[7] Ibid

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[14] Ibid

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[17] Ibid

[18] Ibid

[19] Ibid

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[21] Ibid

[22] Ibid

[23] Supra 2

[24] Supra 2

[25] Supra 2

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[28] Ibid

[29] Ibid

[30] Ibid

[31] Ibid

[32] Ibid

[33] Ibid

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[37] Ibid

[38] Supra 13

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[40] Supra 2

[41] Supra 2

[42] Supra 26

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[44] Supra 26

[45] Supra 6

[46] Supra 27

[47] Supra 27

[48] Supra 27

[49] Supra 27

[50] Supra 27

[51] Supra 2

[52] Supra 2

[53] Supra 28

[54] Retrieved on

[55] Retrieved on

[56] Retrieved on

[57] Ibid

[58] Ibid

[59] Retrieved on

[60] Retrieved on


  1. Thank you for a very informative article and i think this will definitely be a very good thing for home buyers and will go a long way in regulating the industry. I was reading a lot on this subject and in another blog ( i was a bit confused, cause it is not clear if projects under construction (where lot of buyers are facing issues like delays, etc) will also be covered by these new laws?


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