Applicability of Lease Transactions Under RERA: Regulations, Impact, and Compliance

 

Real Estate Sector and RERA’s Role

India’s real estate sector plays a crucial role in the economy and job creation. According to a report by the Confederation of Real Estate Developers' Association of India (March 2024), the sector’s market size is projected to grow to $1.3 trillion by 2034 and $5.17 trillion by 2047. The Real Estate (Regulation and Development) Act, 2016 (RERA Act) was introduced to regulate and promote transparency in the sector while safeguarding consumer interests

Lease Transactions and Their Legal Definition

Leasing is a common method of creating third-party rights in immovable property. The Transfer of Property Act, 1882, defines a lease as a right to enjoy a property for a specific period in exchange for consideration. However, the applicability of the RERA Act to lease transactions remains unclear due to the specific definitions of ‘allottee’ and ‘real estate project’ within the legislation

Court Rulings on Lease Transactions Under RERA

Several courts and tribunals have interpreted the RERA Act in relation to lease transactions:

• Lavasa Corporation v. Jitendra Jagdish Tulsiani: The Bombay High Court ruled that long-term leases can fall under RERA’s jurisdiction
• Nagpur Integrated Township Pvt. Ltd. v. Sujit Chandankhede & Ors.: MREAT stated that long-term leases resemble sales and may be regulated under RERA
• Marg Properties Limited v. T.M. Arunachalam: TNREAT ruled that a lease deed structured like a sale must comply with RERA

Need for Clarity in RERA Regulations

Various state RERA authorities have differing views on lease applicability. To ensure uniformity, clear legislative amendments, rules, or notifications are needed. Establishing clear guidelines on long-term and short-term lease classification will provide legal certainty and enhance compliance within India’s real estate sector

 

Latest RERA News