Urgent Need for Stricter RERA and Insolvency Laws to Protect Homebuyers
A BJP Member of Parliament, Laxmikant Bajpai, recently raised concerns in the Rajya Sabha regarding the need for comprehensive amendments to real estate and insolvency laws. He pointed out that a large number of homebuyers across the country have invested their life savings into housing projects but are yet to receive possession of their homes.
While acknowledging that the central government had introduced the Real Estate (Regulation and Development) Act (RERA) and established institutions such as the Insolvency and Bankruptcy Board of India (IBBI) and the National Company Law Appellate Tribunal (NCLAT), he stated that the actual implementation has not matched the intended outcomes. The situation, according to him, remains particularly weak in Uttar Pradesh, where several housing projects are still incomplete.
He indicated that RERA implementation in the state has serious gaps, with many builders managing to avoid legal responsibility by declaring insolvency. This has left homebuyers in a difficult position, with projects stalled and no clear resolution in sight. The MP also highlighted cases where construction has been completed but property registration remains pending because builders have not cleared their dues to government authorities. As a result, buyers are unable to obtain legal ownership of their homes. He stated that in such situations, the fault lies with the developer, but the burden is ultimately borne by the common buyer.
He further suggested that insolvency laws need to be strengthened to ensure accountability. Specifically, he proposed that if a builder declares insolvency, their personal assets should also be attached after due investigation, and strict penalties should be imposed where wrongdoing is established. Another concern raised was the delay in resolving complaints under RERA. He noted that once a developer defaults, investigations should be completed within a defined timeline, and cases should not be allowed to continue for extended periods without closure.
He stressed that without a stricter and more effective legal framework, the current situation is unlikely to improve. The government was urged to introduce necessary amendments in both real estate and insolvency laws to ensure that lakhs of affected homebuyers receive timely justice. In recent years, multiple stalled housing projects across major states, including Uttar Pradesh, have highlighted gaps in coordination between RERA authorities and insolvency proceedings. Homebuyers have often found themselves treated as unsecured creditors during insolvency cases, despite regulatory changes aimed at improving their position.
