The Real Estate (Regulation and Development) Act, 2016 (RERA), has transformed India’s real estate landscape by introducing transparency, accountability, and efficiency. For builders in Chennai, understanding and complying with RERA is not just a legal obligation but also a strategic advantage. This blog delves into the essential provisions of RERA that every Chennai builder should be aware of, with a focus on obtaining “RERA approval in Chennai.”
What Is RERA and Why Is It Crucial for Builders in Chennai?
RERA is a national framework aimed at protecting homebuyers and promoting fair play in the real estate sector. In Tamil Nadu, the Tamil Nadu Real Estate Regulatory Authority (TNRERA) administers RERA’s provisions. Builders must register their projects with TNRERA before advertising, selling, or offering possession RERA. Non-compliance can lead to penalties, legal actions, and loss of credibility.
Key Provisions of RERA Every Chennai Builder Should Know
1. Mandatory Project Registration
All real estate projects in Chennai exceeding 500 square meters or eight apartments must be registered with TNRERA. Builders must submit project details, including timelines, approvals, and legal documents. Failure to register can result in penalties and legal consequences RERA.
2. Transparency in Advertising
Builders are prohibited from publishing misleading advertisements. From July 1, 2025, all real estate ads must display the project’s RERA registration number, QR code (Form-C), approved project location, TNRERA website, and the promoter’s full contact details. Inflated claims and vague disclaimers are strictly prohibited
3. Project Information Display Boards
TNRERA mandates the installation of prominent information display boards at all registered real estate project sites. These boards must include critical details such as the promoter’s name, project name, TNRERA registration number, expected project completion date, and the TNRERA website. Installation must occur immediately after project registrationÂ
4. Escrow Account for Fund Management
Builders are required to deposit 70% of the funds collected from homebuyers into a separate escrow account. This ensures that the money is used exclusively for the specified project, reducing the risk of misallocation.
5. Advance Payment Cap
Builders cannot collect more than 10% of the property’s cost before signing a formal agreement for sale. This provision protects buyers from builders who might otherwise demand large sums upfront without commitment .
6. Project Delays and Compensation
If a builder fails to deliver possession on time, they must compensate the buyer with an interest rate prescribed under RERA. This provision holds builders accountable for project timelines and ensures buyers are protected from undue delays.
7. Defects Liability
Builders are responsible for rectifying structural defects or poor work quality for up to five years from the date of possession. This provision ensures that builders maintain the quality and integrity of their constructions
Recent Updates Impacting Builders in Chennai
Blocking Public Roads
TNRERA has issued a directive prohibiting developers from blocking public roads with compound walls or gates in private housing layouts. This rule, effective from May 7, 2025, aims to preserve public road connectivity and urban planning
Extension of Project Registration
If builders seek a project registration extension exceeding one year, they are required to deposit an additional 20% of the total amount collected from homebuyers into the designated project account. This measure ensures that funds are available for project completion and protects homebuyers’ interests
Benefits of RERA Approval for Builders in Chennai
Enhanced Credibility: RERA registration boosts the builder’s reputation by demonstrating commitment to transparency and quality.
Legal Protection: Compliance with RERA provisions reduces the risk of legal disputes and penalties.
Access to a Larger Market: RERA-registered projects are more attractive to investors and homebuyers, expanding the builder’s customer base.
Financial Discipline: Mandatory escrow accounts and advance payment caps ensure better fund management and project completion.
Conclusion
For builders in Chennai, obtaining “RERA approval in Chennai” is not just a regulatory requirement but a strategic move that enhances credibility, ensures legal protection, and fosters trust among buyers. By adhering to RERA’s provisions, builders can navigate the competitive real estate market with confidence and integrity.