Subhankar Kar, a 5th-year Law Student specialising in Corporate Law at the School of law, Lovely Professional University has written this blog explaining the Arrival of the Real Estate Regulation Authority (RERA) in India and its benefit in the Indian Economy.
Roti, Kapda and Makan are three elements which are necessary for everyone’s life without which a human being cannot live a good life among these three, makan means property. Property is not only a place to live but it is also one kind of investment which is the favourite and risk-free investment for every individual in society.
What is RERA
The Real Estate (Regulation and Development) Act, 2016, (RERA) is an act passed by the Indian parliament. The RERA seeks to protect the interests of home buyers and also boost investments in the real estate sector. While the Rajya Sabha passed the RERA bill on March 10, 2016, approval from the Lok Sabha came on March 15, 2016. The act then came into force on May 1, 2016. While 59 of its 92 sections were notified on May 1, 2016, the remaining provisions came into force on May 1, 2017.
Under the Act, state governments are required to notify their own rules under the Act, on the basis of the model rules framed under the central Act. Before RERA Act 2016, this sector was very unorganized from the very beginning. For the benefit of the consumer and for safeguarding them Government have formulated some important legislation like the Consumer Protection Act, and the Transfer of Property Act, which used to govern the right of the consumer but the RERA Act 2016 was the act which has govern the whole Real Estate Sector and brought rules and regulations that how a seller can sell a property and how a buyer can buy a property.
Aim & Objective of RERA
The Real Estate Regulatory Authority (RERA) was established under the Real Estate (Regulation and Development) Act, 2016. Its primary objective is to regulate the real estate sector and address the various issues faced by home buyers. It has the following objectives:
- To protect the interest of the allottees and ensure their responsibility
- To maintain transparency and reduce the chances of fraud
- To implement Pan-India standardization and bring about professionalism
- To enhance the flow of correct information between the home buyers and the sellers
- To impose greater responsibilities on both the builders and the investors
- To enhance the reliability of the sector and thereby increase confidence amongst the investors.
The benefit in the Indian economy after the arrival of the RERA Act 2016
1) Employing a large labour force in nation building
Many skilled and unskilled workers are absorbed by construction and allied activities, and a significant number are employed from rural areas where agriculture remains the only source of employment. As of 2022, conservative estimates indicate that the real estate sector employs nearly 70 million Indians, and the sector is expected to exceed the $1 trillion mark by 2030. Moreover, the implementation of the RERA Act, improvements in labor laws, and better overall compliance have resulted in significant strides being made in recent years, benefiting those engaged in the Indian real estate sector.
2) Driving rapid urbanization with critical housing and commercial infrastructure.
With the real estate sector providing business support to more than 270 linked businesses, this significant industry has a significant multiplier effect throughout the entire supply chain. Examples of important ancillary service sectors include design, contracting, facility management, leasing, and property consultation. Important supply industries include steel, cement, timber, and construction materials. There will be a wider positive multiplier effect on related industries and persons involved in them as real estate industry activity picks up.
3) Facilitating large foreign investment inflows that drive further growth.
Over the past few decades, India’s economic growth has been largely driven by the country’s rapid urbanization, with cities such as Bangalore, Mumbai, the National Capital Region, Pune, and Hyderabad attracting significant human and financial capital. This transition has been greatly facilitated by the real estate industry, municipal governments, private developers, and infrastructure firms. The Indian real estate sector will continue to play a crucial role in maintaining this rate of urbanization and constructing the necessary infrastructure to accommodate the nation’s sizable young workforce, as the country is expected to benefit from its high demographic dividend by at least 2050. Moreover, real estate-related premiums, development fees, and approval fees will continue to be significant sources of income for local governments.
4) An important asset class and source of wealth for millions of Indians.
High-quality real estate projects and the businesses associated in their construction are luring strategic and foreign investments in the nation today because the real estate sector provides crucial infrastructure that continues to be crucial in igniting the Indian growth story. Throughout 2017 and 2018, the amount of capital coming in from renowned private equity (PE) firms and other foreign corporations grew to $24 billion, a 200% increase over the previous five years. The Indian economy is anticipated to receive a much-needed boost from verticals like warehousing, industrial parks, and data centres as domestic and foreign businesses rush to establish their distribution hubs there at the moment.
Residential and commercial real estate are increasingly taking precedence over other conventional asset classes like fixed deposits or gold as more Indians invest their money in wealth-building strategies that can also dramatically improve their standard of living. In truth, the real estate industry has always been a significant asset class and a source of wealth development for Indians. Younger investors who aren’t yet ready to purchase their first home are drawn to modern products like REITs. Many Indian households still use the real estate market as a major savings vehicle, and recent regulatory changes have further increased consumer confidence.
RERA has helped a lot in the proper development Real Sector in India which is one of the biggest contributors to our Indian Economy and making proper rules for the registration of property and duties and rights of the Promoter, Real Estate Agent, and Buyer. Both residential and commercial real estate are increasingly taking precedence over more conventional asset classes like fixed deposits or gold as more Indians invest their money in wealth-building strategies that can also dramatically improve their standard of living.
In fact, the real estate industry has long been a significant asset class and a source of wealth creation for Indians, with more modern investments like REITs appealing to younger investors who have not yet made the decision to purchase their first house. With recent changes in the regulatory environment, the real estate sector continues to be a crucial avenue for saving millions of Indian households. This boosts consumer confidence.
 BA LLB , 5TH Year , Lovely Professional University: The arrival of RERA & its benefit on the Indian Economy
 Available at : https://housing.com/news/rera-will-impact-real-estate-industry/ (last seen at 25th March 2023)
 See at : https://www.financialexpress.com/money/how-the-indian-real-estate-sector-drives-the-nations-economy/3017285/ (last seen at 25th March 2023)
 Available at : https://housing.com/news/rera-will-impact-real-estate-industry/ (last seen at 25th March 2023