Homebuyers Demand RERA Amendments to Protect Buyers' Interests
Homebuyers' body FPCE has demanded that the Real Estate (Regulation and Development) Act, 2016 (RERA) be amended to incorporate a mechanism for verifying the track record of builders before granting permission to launch projects for sale. The association also seeks a new provision in the legislation to ensure compensation to homebuyers if builders fail to meet their promise of providing certain facilities and amenities.
The 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 RERA to give more teeth to regulators for protecting the interests of consumers. Upadhyay, who is also a member of the Central Advisory Council, RERA, formed by the ministry, has highlighted certain critical gaps in the RERA Act that cause significant injustice to homebuyers across India.
The association has suggested the introduction of a separate section in the Act to specifically address the issue of builders failing to provide promised facilities and amenities in their projects. They have also proposed that the ministry issue a Standard Operating Procedure (SOP) to all RERA authorities, directing them to ensure that builders deposit adequate funds in an escrow account to complete pending facilities. Regulators should monitor and enforce the timely completion of such facilities.
Currently, RERA authorities do not verify whether a promoter has cleared all dues to allottees of other projects, as well as charges levied by central or state authorities or any courts/forums/quasi-judicial bodies. As a result, errant developers with poor track records continue launching new projects, perpetuating injustice to new buyers. Upadhyay suggested that the ministry mandate all RERA authorities to obtain a declaration from promoters before registering any new project.
In the declaration, 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. 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. If any promoter submits a false declaration, there must be a legal provision to permanently bar such a promoter pan-India from the real estate business.
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. 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. Many authorities remain passive spectators, despite having sweeping powers under the RERA Act to investigate, penalize, and pass binding orders.
Their (regulators) 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 president said. Upadhyay added that 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. In the letter, Upadhyay said that state RERA authorities have failed to rein in these exploitative practices, and it is now imperative that the Union ministry urgently steps in.
