RERA's Impact: Eight Years of 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 strides but faces ongoing challenges in enforcement and data management.
ReraReal EstateHousingMaharashtraRegulationReal Estate MaharashtraMay 29, 2025
Out of 36 states and Union Territories, five still have interim RERA authorities while two don’t. “After eight years, different states have taken different steps, but the best are Maharashtra and Madhya Pradesh. But even they have not met 50-60% of their targets,” said Gulam Zia, senior executive director, Knight Frank India, adding many of them have achieved just 20-25% of targets.
Struggling with Data Load
Experts point out that RERA authorities are struggling with challenges ranging from humongous data and lack of skilled manpower to too much reliance on state agencies. Besides, RERA authorities don’t have the teeth to enforce their orders and often have to depend on state authorities. The state bodies, however, often ignore RERA, a consultant who did not want to be quoted told FE.
Zia said 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 humongous data,” Zia said, adding that the current system is based on complaints by buyers. “Data uploading is voluntary. Only if buyers raise an issue, problems come to surface,” he added.
Zia said that unless AI and machine learning are implemented, the problems will remain. Though there has been criticism that there is no mechanism to check whether developers have deposited 70% of the collected funds in escrow accounts as per the RERA norm, experts say this rule has helped stop developers from transferring the money for other purposes.
Anuranjan Mohnot, managing director and CEO, Lumos Alternate Investment Advisors, said if developers did not meet the escrow norms, it is a violation of law and has to be strictly dealt with. However, if customers fail to check the escrow account, it is a fault on their part, he added.
Silver Lining
Despite the issues, developers say that before and after RERA’s implementation, there has been a 100% improvement in the way the sector operated and regulated. “Now, there is no worry about titles, no worry about money being misused and a separate body to look into complaints,” Hiranandani Group chairman Niranjan Hiranandani said.
While he agreed that not all states have progressed like Maharashtra and corrupt practices still persist in some states, he said the latter has done a good job regarding publishing the details of projects, appointing specialists, issuing orders, imposing penalties and so on. “It has mainly brought more confidence among buyers than before,” he added.
Over 143,000 projects have been registered with RERA authorities, comprising 11.1 million units between January 2017 and January 2025 across 20 states, data tracked by PropEquity showed.
Mohnot agreed with Hiranandani. “Diversion of funds has come down by 80-90% after RERA was implemented,” he added. RERA led to the development of organised market with sales of many developers crossing Rs 10,000 crore, while some touching Rs 30,000 crore, Mohnot said. “Branded and corporate developers benefited with RERA while fringe players went out of the market,” he added.
However, he said RERA is too customer-centric. “RERA should allow developers to take out funds if financial closure is done. This will help in efficient utilisation of capital in a capital-starved country like India,” he said.
Sunil Pareek, executive director at Assets Property Group, said RERA has benefited buyers in the market addressed by top developers, which is nearly 65-70% of launches as they follow the law in letter and spirit. “Out of the balance, 20% of the market seems to just have kind of followed the law in spirit and to that segment RERA still needs to show full benefits,” he said.
Tier I developers don’t submit “modified” data as they follow corporate governance and transparency norms. It is mostly tier III developers who apparently sometimes meddle with the data out of their own compulsions. Buyers need to be cautious about that, he added.
Pareek also pointed out that RERA doesn’t have overarching powers in situations such as stuck projects and NCLT cases, where interdependency with other agencies is high. In the next round of law improvements, these areas can be focused on, he said.
Frequently Asked Questions
What is the Real Estate (Regulation and Development) Act, 2016 (RERA)?
RERA is a law implemented in 2016 to bring transparency, accountability, and consumer protection to the real estate sector in India. It aims to regulate real estate projects and protect homebuyers.
What are the main challenges faced by RERA authorities?
RERA authorities face challenges such as managing large amounts of data, lack of skilled manpower, and inadequate enforcement powers. They often have to rely on state agencies, which may not always cooperate.
How has RERA impacted the real estate sector?
RERA has led to significant improvements in the sector, including better transparency, reduced fund diversion, and increased confidence among buyers. However, implementation varies across states, and some areas still face issues.
What is the role of escrow accounts under RERA?
Under RERA, developers are required to deposit 70% of the collected funds in escrow accounts to ensure that these funds are used for project development and not diverted for other purposes.
What improvements are suggested for RERA?
Experts suggest implementing AI and machine learning to manage data, allowing developers to use funds for financial closure, and giving RERA authorities more enforcement powers to handle stuck projects and NCLT cases.
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