Remarks by the apex court on the functioning of the Real Estate (Regulation & Development) Act (RERA), a 2016 legislation to protect home buyers, has set the proverbial cat among the pigeons. Chief Justice Surya Kant, hearing a plea by the Himachal Pradesh government to be allowed to shift its RERA offices from Shimla to Dharamshala, noted the institution was doing nothing except “facilitating” defaulting builders.
The Chief Justice noted consumers were “completely disappointed”, and that it would be “better to abolish this institution…” He also suggested “the states should revisit and rethink of even constituting this authority.”
Responding to long-standing demands for protection against cheating builders, the Congress-led UPA government introduced a home buyers protection bill in 2013. It underwent many changes, was passed by Parliament in 2016, and finally notified for implementation from 1 May 2017. While RERA is a central act, it is the states who notify the rules and appoint regulators for the Act’s implementation.
RERA came not a day too soon. The real estate industry was replete with cases of promoters taking advances from buyers, and thereafter not being able to deliver their homes. In the Delhi-NCR region, builders Sanjay and Ajay Chandra, former promoters of Unitech, have been in and out of jails for over a decade since 2011 for cheating and money laundering. In Mumbai, one of the city’s largest developers, Dharmesh Jain of Nirmal Lifestyle, was arrested in April 2023 for cheating 34 flat-buyers of Rs 11 crore.
Flawed implementation
RERA is essentially a consumer protection act tailored to ensure transparency and track compliance. All projects are required to be registered with the Regulatory Authority. To ensure money is not siphoned off, developers have to deposit 70% of the funds raised into an escrow account dedicated for the project. Builders must disclose project layouts, approvals, and timelines, and cannot change plans without the buyers’ consent. If projects are delayed, developers are liable to be penalized. The regulator is also required to set up dedicated tribunals, and dispose of complaints within 60 days.
The problem is not with the act, it is with its implementation. Over the last 8 years of its functioning, RERA’s has delivered patchy results. In Maharashtra, the MahaRERA has had a good track record of over 50,000 project registrations, accounting for 69% of all projects registered in the country. It has also recorded the highest number of complaints received - 31,000 by end of 2025, of which nearly 80% were heard and resolved through ‘conciliation’ or adjudication.
In most states, though, either the tribunals are not set up or are non-functional, and there is hardly any complaint disposal machinery. Even in Maharashtra, by the end of 2025, the tribunals had over 8,000 complaints awaiting hearing.
However, RERA’s weakest link is its inability to implement its own orders. In the documented case of Sumeet Mehta, a resident of the Mumbai suburb of Goregaon, he has been awaiting recovery of the 75% down payment he made to a builder since January 2024, though an order has been passed in his favour.
Section 40 (1) of the act provides for the recovery of payments and penalties. However, after a RERA Tribunal passes an order, consumers have to run from pillar to post to enforce the order. As things stand, the order has to be first converted into a ‘warrant’ by the district magistrate or collector, a lengthy process in itself; and then the ‘warrant’ has to be executed by auctioning assets using the police machinery.
In Maharashtra, till about a year ago, ‘warrants’ for recovery of Rs 980 crore were issued by the RERA tribunal, but only Rs 209 crore had been actually recovered. In most states, the legal machinery hardly functions with builders brazenly disobeying directions of the RERA Authority and the tribunals. In some states, the RERA Authority does not even have the machinery to monitor the progress of the registered projects. The Uttarakhand RERA Authority for instance recently complained that, of the 643 projects registered with it since its inception, the Authority had information only about completion of 163 projects.
“RERA can only function if there is 90-95% compliance. If the majority don’t comply, how can anything be enforced,” a former chairman of MahaRERA, Gautam Chatterjee, once told this writer.
Tighter enforcement
Despite all its ills, this does not mean that the legislation must be repealed. The process of registration of projects under Section 5 of RERA, the monitoring of the progress of projects, and the power given to consumers to file and process complaints against developers and realtors, has had a welcome deterrent effect.
In 2022, the Haryana Real Estate Regulatory Authority issued an order freezing the bank accounts of three mass housing projects of Ocean Seven Buildtech (OSB). Dozens of Mumabi builders have been fined heavily, upto Rs 20 lakh in some cases, for issuing misleading advertisements. These have had a salutary effect on those wanting to bend the law.
That said, the legislation needs to be drastically amended to provide more resources and teeth to the real estate regulatory authority. Perhaps, the RERA machinery has been deliberately understaffed. The dispute resolution machinery, which is woefully inadequate, should be beefed up with more tribunals and faster closure of cases.
RERA authorities require stronger execution powers, similar to civil courts. This must include dedicated recovery cells to enforce monetary orders. Finally, stricter penalties for non-compliance, including criminal action where necessary, will clean up the industry faster.