A member of the government’s Central Advisory Council (CAC) on real estate has written to the Union Ministry of Housing and Urban Affairs, stating that the mandatory registration of real estate projects under the Real Estate (Regulation and Development) Act, 2016 (RERA) has become ineffective in protecting homebuyers. The member, Abhay Upadhyay, who also heads the Forum for People’s Collective Efforts (FPCE), emphasized the need for immediate reforms to ensure accountability, transparency, and genuine compliance within the real estate sector.
RERA Registration Losing Meaning
In his letter to Union Housing Minister Manohar Lal Khattar, Upadhyay highlighted that the RERA registration number — once intended as a hallmark of reliability — has now become a mere procedural formality. He stated that “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.” Builders continue to exploit homebuyers despite being RERA-registered, as many state authorities have failed to exercise their powers to penalize errant developers or enforce compliance.
Proposed Mandatory Declaration for Builders
To restore the credibility of RERA registration, Upadhyay has proposed that the submission of a declaration by promoters and their group entities should be made mandatory before any new project is registered. The declaration must confirm that:
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All dues to homebuyers, local authorities, courts, and tribunals from other projects have been cleared.
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There are no pending complaints or unresolved obligations from earlier developments.
He has further suggested that false declarations should lead to a lifetime ban on such developers from engaging in any real estate business across India, along with severe monetary penalties.
Plugging Legal and Operational Gaps in RERA
The FPCE president stressed that several gaps in the current RERA framework leave homebuyers exposed to exploitation. Despite the law’s intent to regulate the sector, many developers continue to misuse provisions, delay projects, and neglect promised amenities such as clubhouses, swimming pools, and landscaped gardens.
Currently, RERA only provides compensation for delays in project possession, which Upadhyay described as “grossly inadequate.” He urged the housing ministry to direct RERA authorities to issue Standard Operating Procedures (SOPs) to ensure that:
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Developers deposit adequate funds in escrow accounts to complete pending amenities.
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Homebuyers are compensated until all promised facilities are delivered and functional.
Proposal for Buyer Refunds and Exit Policy
Highlighting uncertainty following a recent Supreme Court judgment distinguishing between “genuine homebuyers” and “speculative investors,” FPCE has called for a clear and uniform exit policy. The body proposed that:
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Homebuyers should be entitled to a 100% refund within one year of booking.
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After one year, buyers should be eligible for a 90% refund, ensuring fairness and predictability.
This, according to FPCE, would prevent disputes and reduce litigation while providing homebuyers with transparent and equitable options in case of delays or dissatisfaction.
Cap on Developer Collections Before Completion
To prevent misuse of funds, FPCE also recommended that builders should not be allowed to collect more than 75% of the total unit cost during the construction phase. The remaining 25% should only be payable after the project is completed in all respects and a valid completion certificate is obtained. This measure would ensure better financial discipline and guarantee that construction quality and promised amenities are delivered as per commitments.
Call for Government Intervention
Upadhyay’s letter urged the ministry to act swiftly by issuing temporary SOPs to all state RERA bodies until formal amendments to the Act can be made. These SOPs would ensure consistent enforcement across states and prevent errant developers from exploiting loopholes in the current system. “Homebuyers’ trust in RERA can only be restored when its registration number truly becomes a symbol of safety, reliability, and accountability,” he said.
Conclusion
The recommendations made by Abhay Upadhyay and FPCE underline the urgent need for reform within India’s real estate regulation framework. By introducing mandatory builder declarations, escrow-based safeguards, refund policies, and limits on fund collection, the Ministry of Housing can ensure that RERA achieves its core objective — protecting homebuyers and restoring faith in the Indian real estate sector.
