Homebuyers’ body seeks changes in RERA law, calls for rules to verify developers’ track record before project approvals
Builders continue to ‘brazenly’ exploit homebuyers with project delays, fund mismanagement, and repeated violations of agreements, often under the watch of RERA authorities. The Supreme Court has repeatedly flagged such lapses, noting that despite having wide powers to investigate, penalize, and issue binding orders under the RERA Act, many authorities remain ‘passive spectators’. This raises questions about regulatory intent and possible collusion shielding errant builders, the homebuyers’ body FPCE said in a letter to Union Housing and Urban Affairs Minister Manohar Lal.
The association has urged amendments to the RERA law to give more teeth to regulators for protecting the interests of consumers.
As amendments in the Act might take time, the FPCE said the ministry should issue an SOP (standard operating procedure) to all RERA authorities directing them to ensure builders deposit adequate funds in an escrow account to complete pending facilities. The regulators should monitor and enforce timely completion of such facilities.
Forum For People’s Collective Efforts (FPCE) president Abhay Upadhyay has written a letter to Union Minister of Housing and Urban Affairs Manohar Lal, seeking amendments in the Real Estate (Regulation and Development) Act, 2016 (RERA). The letter noted that the state RERA authorities have failed to rein in these exploitative practices and it is now imperative that the Union ministry urgently steps in.
Upadhyay said the RERA registration number has not become a symbol of trust for consumers, “unlike FSSAI, where the stamp itself instills confidence that the product is safe for consumption, the RERA registration number has failed to become a symbol of trust”.
The FPCE president noted that this is a wake-up call for the ministry. “Builders are brazenly exploiting homebuyers—delaying projects, misappropriating funds, and violating agreements—right under the nose of RERA Authorities as has also been repeatedly observed and flagged by the Hon’ble Supreme Court in various judgments and remarks. Despite being armed with sweeping powers under the RERA Act to investigate, penalize, and pass binding orders, many Authorities remain passive spectators. Their silence and inaction, in the face of glaring violations, raise serious questions about regulatory will—and in some cases, suggest a troubling nexus that shields errant builders from accountability,” the letter said.
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It has also sought to introduce a mechanism for verifying builders’ track records before granting project approvals, providing provisions mandating compensation for buyers when promised facilities and amenities are not delivered, along with uniform rules for refunds in cases where buyers cancel their units.
Unlike the FSSAI stamp, the RERA registration number has failed to become a symbol of trust
“This is precisely why even the registration of a project with RERA has become meaningless—it offers no assurance of compliance or protection. Unlike FSSAI, where the stamp itself instills confidence that the product is safe for consumption, the RERA The registration number has failed to become a symbol of trust. Instead, it has become a mere formality that builders flaunt while continuing to flout the law,” the letter said.
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Since State RERA Authorities have failed to rein in these exploitative practices, it is now imperative that the Ministry urgently steps in. Issuing uniform, enforceable Standard Operating Procedures (SOPs) to all state RERA Authorities can provide immediate relief to homebuyers. Legislative amendments may take time, but administrative clarity and decisive action cannot wait. The real estate sector’s contribution to national GDP depends on restoring buyer trust and that trust hinges on visible, robust protection mechanisms, the letter read.
Through his letter, Upadhyay, who is also a member of Central Advisory Council, RERA formed by the ministry, suggested introduction of a separate section in the Act to specifically address the issue of failure of builders in providing promised facilities and amenities in their projects.
The letter recommended that builders be required to deposit sufficient funds in an escrow account to ensure completion of pending facilities. It also proposed that all allottees receive compensation at prescribed rates until the promised amenities are fully delivered, with strict monitoring and enforcement of timely completion.
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Further, the FPCE pointed out that there is no mechanism to verify a promoter’s track record before a new project registration. RERA authorities currently do not verify whether a promoter has cleared all dues to allottees of other projects as well as charges levied by the central or state authorities or any courts/forums/quasi-judicial bodies due to which “Errant developers with poor track records continue launching new projects, perpetuating injustice to new buyers.”
All RERA authorities should obtain a declaration from promoters before registering new projects
In his letter to the housing minister, Upadhyay suggested that the ministry mandate all RERA authorities to obtain a declaration from promoters before registering any new project. In the declaration, the promoters must confirm that they have cleared all dues payable to the allottees, including under any order of any forum, court or any quasi-judicial bodies across pan-India jurisdiction.
Promoters should also declare that they have cleared all dues payable to any authorities/forums/courts across India, including any penalty levied by any such bodies, it suggested. The declaration should apply not only to the promoter company but also to group companies with the same brand name; entities with common promoters/shareholders, the FPCE said.
“If any promoter submits false declaration, there must be legal provision to permanently bar such promoter pan-India from real estate business and heavy penalties should be imposed to deter others from following this route, ” the letter said.
“These gaps need urgent policy intervention through amendments to the Act or, in the interim, through Standard Operating Procedures (SOPs) to all state RERA Authorities,” Upadhyay said in the letter.
