Supreme Court Criticizes RERA, Suggests Abolition for Failing Homebuyers

The Supreme Court has taken a critical stance on the functioning of Real Estate Regulatory Authorities (RERAs), suggesting that it might be 'better to abolish' these bodies. The court has raised serious concerns, stating that RERAs appear to serve little purpose beyond facilitating defaulting builders.

A bench comprising Chief Justice of India (CJI) Surya Kant and Justice Joymalya Bagchi expressed their dissatisfaction with the current state of RERAs. The bench emphasized that states should reflect on the original purpose behind the introduction of RERA and consider whether these authorities are serving their intended goals.

“It is high time that all the states should revisit and rethink constituting this authority,” CJI Surya Kant said. The bench added, “Except facilitating the builders in default, this institution is doing nothing. Better abolish this institution, we don't mind that.”

The Supreme Court made these observations while hearing an appeal challenging the Himachal Pradesh High Court's decision to stay a state government notification for shifting the state RERA office to Dharamshala. When the bench was informed that a retired IAS officer was appointed in RERA, CJI Surya Kant remarked, “In every state, it has become a rehabilitation center. These authorities are all occupied by these persons.”

The bench further noted, “The people for whom this institution was created, they are completely depressed, disgusted, and disappointed. None of them are getting any effective relief. For whom this institution actually is now serving, you will find out when you meet these people.”

In a previous order, the Himachal Pradesh High Court had stayed the state government’s decision to shift the RERA office, stating that the decision was made “without even identifying the alternative office place.” The top court, however, interfered with this order on February 12 and permitted the state to shift the RERA office to Dharamshala from Shimla. The court also directed the shifting of the appellate tribunal to ensure that persons affected by RERA orders are not inconvenienced.

The RERA Act of 2016 was enacted to regulate the real estate sector, promote transparency, safeguard homebuyers, and ensure timely project delivery. However, the Supreme Court has repeatedly expressed its displeasure over the functioning of RERAs, describing them as “rehabilitation centers for retired bureaucrats.”

In September 2024, a bench of Justices Surya Kant and Ujjal Bhuyan had made similar remarks while hearing an appeal against a Delhi High Court judgment. The bench had stated, “We do not want to speak about RERA. It has become rehabilitation centers for former bureaucrats who have frustrated the entire scheme of the Act.”

The Forum for People’s Collective Efforts (FPCE), a homebuyers’ body that played a crucial role in the enactment of RERA, has long highlighted how the authority has strayed from its core mandate of protecting homebuyers. “The Supreme Court’s Chief Justice has now echoed this concern in the strongest possible terms, even suggesting that such an institution is better closed if it continues to serve builders rather than consumers,” the FPCE said in a statement.

Despite nine years since RERA was legislated, there is still no certainty that a RERA-registered project will be completed on time, that all promises made to homebuyers will be fulfilled, or that families can invest without tension. This itself shows what RERA has achieved—or failed to achieve since its inception, according to Abhay Upadhyay, president of FPCE and a member of the CAC, MoHUA.

“If RERA cannot deliver on the expectations of homebuyers, then tough steps must be taken to either reform it fundamentally or rethink its existence altogether. Decisive action is needed to restore trust and fairness in the real estate sector,” Upadhyay added.

The Supreme Court’s strong criticism of RERA underscores the need for significant reforms in the real estate regulatory framework to ensure that the interests of homebuyers are protected and that the real estate sector operates with transparency and accountability.