Are new Indian real estate laws unravelling?

The Indian government has been very active in the field of real estate regulation over the last few weeks. The introduction of an array of new regulations was supposed to make the industry more transparent offering greater protection to investors. The full breadth of the regulations has yet to be adopted across India and there are provisions to allow state authorities to tweak the base regulations to suit their own particular situations. However, this seems to be causing some problems in Mumbai.

RERA Act 2016 and Indian real estate

The Regulatory and Authority (RERA) Act 2016 has been used by the state authorities of Mumbai to make various changes to the original draft regulations. As we have covered in recent articles, the act was seen as a major step forward in fighting corruption and a lack of transparency in the Indian real estate market. This together with recent moves against money laundering has certainly put the Indian real estate market back on the map. However, will changes from state to state undermine this good work?

Mumbai Grahak Panchayat

Consumer rights group Mumbai Grahak Panchayat (MGP) has issued an online call for signatures to oppose the proposed rule changes. They believe that the changes favour developers over investors and reduce the original level of protection afforded to all parties. The option to tweak the underlying new regulations from state to state was seen as a bargaining tool to ensure as many of the regulations were adopted as possible.

MGP has serious concerns about potential violations of consumer rights and the added protection given to developers. When you bear in mind the size of the Mumbai and the Indian real estate market as a whole there is significant investment at risk. This, at a time when the government of the day has been making good headway, would seem to indicate that property developers still have sway within state authorities.

Finding a balance

It is very tricky to find a balance between protection of investors, protection of developers and the image of the Indian real estate market as a whole. If developers feel they have been penalised then they can very easily withdraw their funding and look elsewhere. If investors feel their protection has been reduced then again they have the option to look elsewhere. When you bear in mind the size of the worldwide real estate market and the ease with which you can invest in overseas markets this could be a problem going forward.

We can be thankful that the situation is being played out in public because many regulatory changes in India are agreed behind closed doors. Whether the Mumbai authorities would be as keen to discuss these changes without the involvement of the MGP is debatable.


There is a growing belief that the Mumbai authorities have been placed under severe pressure by property developers in the region. At the end of the day the changes introduced by the government have been wide reaching, leading to a significant change in historic practices. If state authorities are seen to undermine the general ideals behind the new regulations this could cause friction between investors, developers, state authorities and the Indian government. This is the kind of headline news we do not want to see.

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