RERA: Eight Years Later, Promises and Challenges in the Real Estate Sector
Eight years after its implementation, the Real Estate (Regulation and Development) Act, 2016 (RERA) has made significant progress, but challenges in data management and enforcement persist, especially in states with interim authorities.
ReraReal EstateHousingData ManagementEnforcementReal Estate NewsMay 29, 2025
Out of the 36 states and Union Territories, five still have interim RERA authorities, and two have none at all. “After eight years, different states have taken different steps, but the best are Maharashtra and Madhya Pradesh. However, even they have not met 50-60% of their targets,” said Gulam Zia, senior executive director, Knight Frank India, adding that many states have achieved only 20-25% of their targets.
RERA authorities are grappling with issues ranging from massive data loads to a lack of skilled manpower and excessive reliance on state agencies. Moreover, RERA authorities lack the enforcement power to implement their orders and often depend on state bodies, which may ignore RERA directives, according to a consultant who spoke on condition of anonymity.
In Maharashtra alone, 8,000-10,000 projects are registered with MahaRera, the state’s RERA authority. “There could be errors in data, but no state RERA authority can audit such vast amounts of data,” Zia said. The current system relies on complaints from buyers, with data uploads being voluntary. “Only if buyers raise an issue, problems come to the surface,” he added. Zia believes that implementing AI and machine learning could help address these issues.
While there have been criticisms about the lack of mechanisms to verify whether developers are depositing 70% of collected funds in escrow accounts as mandated by RERA, experts say this rule has significantly reduced the misuse of funds. Anuranjan Mohnot, managing director and CEO of Lumos Alternate Investment Advisors, stated that if developers fail to meet escrow norms, it is a violation of the law and should be dealt with strictly. However, he noted that buyers must also check the escrow account to ensure compliance.
Despite the challenges, developers acknowledge a 100% improvement in the sector’s operations and regulation since RERA’s implementation. “Now, there is no worry about titles, no worry about money being misused, and a separate body to handle complaints,” said Niranjan Hiranandani, chairman of the Hiranandani Group. While not all states have progressed like Maharashtra, Hiranandani noted that the state has excelled in publishing project details, appointing specialists, issuing orders, and imposing penalties, thereby boosting buyer confidence.
Data from PropEquity shows that over 143,000 projects, comprising 11.1 million units, have been registered with RERA authorities across 20 states from January 2017 to January 2025. Mohnot agreed with Hiranandani, stating that the diversion of funds has decreased by 80-90% since RERA was implemented. RERA has also led to the development of an organized market, with sales of many developers exceeding Rs 10,000 crore, and some reaching Rs 30,000 crore. “Branded and corporate developers have benefited the most from RERA, while fringe players have been pushed out of the market,” he added.
However, Mohnot suggested that RERA should allow developers to withdraw funds if financial closure is achieved, which would help in the efficient utilization of capital in a capital-starved country like India. Sunil Pareek, executive director at Assets Property Group, pointed out that RERA has significantly benefited buyers in the market addressed by top developers, which constitutes nearly 65-70% of launches. However, about 20% of the market only follows the law in spirit, and RERA still needs to show full benefits in these segments.
Tier I developers adhere to corporate governance and transparency norms and do not submit modified data. In contrast, Tier III developers sometimes manipulate data due to their own compulsions, and buyers need to be cautious. Pareek also noted that RERA lacks overarching powers in situations like stuck projects and NCLT cases, where interdependencies with other agencies are high. He suggested that these areas should be addressed in the next round of law improvements.
Frequently Asked Questions
What is the Real Estate (Regulation and Development) Act, 2016 (RERA)?
RERA is an act designed to regulate and develop the real estate sector in India. It aims to protect the interests of homebuyers and ensure transparency and accountability in real estate transactions.
How many states and Union Territories still have interim RERA authorities?
As of now, five states and Union Territories still have interim RERA authorities, and two do not have any RERA authority at all.
What are the main challenges faced by RERA authorities?
RERA authorities face challenges such as massive data loads, a lack of skilled manpower, excessive reliance on state agencies, and a lack of enforcement power to implement their orders.
How has RERA improved the real estate sector?
RERA has led to a 100% improvement in the sector’s operations and regulation. It has reduced the misuse of funds, provided better title security, and established a body to handle complaints.
What improvements does RERA need to make in the future?
RERA needs to address issues like allowing developers to withdraw funds if financial closure is achieved, improving data management, and enhancing its enforcement powers, especially in cases involving other agencies.
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