The need of regulation of the Real Estate Market arose from the increasing malpractices in the real estate market where the consumers had to bear a lot of risks such as delayed delivery, title of the property, quality of the facilities provided, and necessary changes etc. before they decide to purchase. The Real Estate Regulation (Development and Authority) Act, 2016 came up with a primary objective to restore the faith of consumers by regulating the business practices and transactions in real estate sector. This whole standardization procedure involved establishment of Real Estate Regulatory Authorities at state level for facilitating the development of the real estate sector and a customer oriented procedure wherein the interests of the customers cannot be harmed. Now the risk borne by the customers is transferred to the developer. Provision of an escrow account, no advertisements allowed without registration with RERA, punishments and compensations in case of delayed delivery, etc. left no room for developers to absorb the other costs incurred by them so they may be transferred on the customers by the way of price increase. Instead of increasing the sales, price hike of 40 per cent within a week of enforcement in some states, led to the decrease in total sales, which were already soaring due to Demonetization. There were other challenges faced by the States in establishing the Regulatory Authority as per the central Act and a lot of controversy occurred in respect of penalties, wherein some states did not enforce the penal provision in their subsequent Act and Rules for enforcement of RERA.

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