What was the need for a regulatory law for the real estate sector?

What was the need for a regulatory law for the real estate sector?

regulatory law for the real estate

The need for a regulatory law for the real estate sector, as addressed by the Real Estate (Regulation and Development) Act, 2016 (RERA) in India, stemmed from several challenges and issues prevalent in the sector. Here are some key reasons that necessitated the introduction of regulatory measures:

Key reasons:

Consumer Protection:

The real estate sector historically lacked a robust mechanism to protect the interests of homebuyers. Cases of project delays, quality issues, and unfulfilled promises by developers were common, leaving buyers with limited avenues for redressal.

Project Delays and Default:

Project delays were a significant concern in the real estate industry. Homebuyers often faced extended waiting periods for possession, impacting their financial plans and causing frustration.

Lack of Transparency:

There was a lack of transparency in the real estate sector regarding project details, approvals, and financial transactions. Buyers often had limited access to accurate and comprehensive information before making a purchase.

Unfair Trade Practices:

Unscrupulous practices, such as misleading advertisements, changes in project plans after sales, and non-disclosure of project-related information, were prevalent. Buyers needed protection against such practices.

Absence of Accountability:

Developers and builders operated with varying degrees of accountability, leading to instances where commitments made during the pre-sales phase were not honored, and there were limited consequences for non-compliance.


Inadequate Grievance Redressal:

The absence of an effective grievance redressal mechanism left homebuyers with few options for seeking resolution in case of disputes with developers.

Standardization of Practices:

The real estate sector lacked standardized practices, leading to variations in contract terms, payment schedules, and project timelines. The absence of uniformity made it challenging for consumers to navigate the market.

Need for Regulatory Oversight:

The absence of a regulatory body overseeing the real estate sector resulted in a lack of enforcement of standards and adherence to regulations. A regulatory framework was essential to ensure compliance with established norms.

Financial Accountability:

Many buyers faced financial risks due to inadequate financial management by developers. RERA seeks to ensure that developers utilize funds for the designated project and helps prevent diversion of funds to other ventures.

Boost to Investor Confidence:

A well-regulated real estate sector boosts investor confidence. The introduction of RERA aimed to create a more transparent and trustworthy environment, attracting both domestic and foreign investments.


The Real Estate (Regulation and Development) Act, 2016, addresses these concerns by establishing a regulatory framework that promotes transparency, accountability, and fair practices in the real estate sector. And ultimately safeguarding the interests of homebuyers and enhancing the overall health of the industry.

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