“All states should now think of the people for whom the institution of RERA was created. Except facilitating builders in default, it is not doing anything else. Better to just abolish this institution,” said Chief Justice of India (CJI) Surya Kant said while hearing a case recently.
The Supreme Court has come down hard on real estate regulatory authorities (RERA), saying they should be abolished as they appear to favour builders and have failed to protect homebuyers, which is their intended purpose.
The remarks were sharp and unusually direct. For a law that was once hailed as a structural reform of India’s real estate sector, the suggestion that it might be better scrapped has reopened a fundamental debate.
Has RERA failed homebuyers? Or is the problem something deeper?
WHY RERA WAS INTRODUCED IN 2016
To answer that, it is important to revisit why the Real Estate (Regulation and Development) Act, 2016 came into being.
Aman Gupta, Director at RPS Group, says RERA was conceived to regulate “for the first time, one of the most unregulated sectors of the Indian economy.”
He explains that for decades the sector operated with minimal regulation and deep information asymmetry.
“The market was fragmented and protection of buyers was almost non-existent,” Gupta says.
By 2015, delays had become systemic.
“Estimates suggested that 4 to 5 lakh units of affordable housing were delayed in almost all the major metros of India. Thousands of crores of investor money were locked in,” he notes.
Developers often drafted agreements that were “unilaterally non-equitable,” and buyers had limited remedies due to strain on consumer courts.
Anurag Goel, Director at Goel Ganga Developments, paints a similar picture.
“When the Act was enacted, India’s real estate industry was undergoing a massive credibility crisis,” he says.
Between 2011 and 2016, sales in the top eight cities dropped by 35–40%. Unsold inventory crossed 7 lakh units. In NCR, the average delay ranged from 24 to 48 months.
“There were no active regulatory bodies to oversee developers while buyers were paying their EMIs as well as rents,” Goel says.
RERA, both experts argue, was a structural corrective to address transparency gaps, financial mismanagement and delayed possession.
HOW RERA WAS DESIGNED TO PROTECT BUYERS
From a legal standpoint, RERA introduced significant obligations on developers.
Gupta lists them clearly:
“Mandatory project registration. A requirement to place 70% of customer deposits in an escrow account. Fines of up to 10% of the project value for non-compliance. And imprisonment for criminal breaches.”
Authorities can order refunds with interest and compensation. They can direct possession with penalties.
Goel adds that non-registration can attract 10% penalties, and continued violations can lead to three years of imprisonment. In certain cases, authorities can even seize bank accounts of unregistered developers.
Since RERA became operational, over 1.15 lakh complaints have been registered nationwide, with an estimated 65–70% settlement rate, according to Goel.
Gupta says more than 100,000 consumer complaints have been resolved, including over 25,000 in Maharashtra alone.
Beyond dispute resolution, RERA mandated disclosures.
“Land title, statutory approvals, project timelines, construction progress and quarterly reports have to be disclosed and published,” Gupta says.
Carpet area definitions were standardised, reducing ambiguity in pricing.
Institutional investment into Indian real estate now exceeds $5 billion annually, which both experts link to improved transparency.
IF RERA IS SO STRONG ON PAPER, WHERE IS THE PROBLEM?
The answer, both experts say, lies in enforcement.
“It is incorrect to claim that RERA is more beneficial to the builders than the buyers,” Gupta says firmly.
“The Act is more beneficial from a structural standpoint to buyers. The predominant issue is enforcement inconsistency.”
Goel echoes this.
“The difficulty is not in law bias, but in the law’s enforcement capacity,” he says.
He points out that developer compliance costs have risen by 8 to 12% due to documentation, escrow compliance and quarterly disclosures.
The real gap, they argue, is between issuing orders and executing them.
THE ENFORCEMENT GAP
Unlike tax authorities, RERA does not have automatic recovery powers.
Gupta explains that enforcement relies on district administration and coordination through legal channels.
“Where developers are illiquid, even the strongest orders remain ineffective,” he says.
The overlap with the Insolvency and Bankruptcy Code has further complicated matters.
“There is a lack of clarity in relation to the coexistence of RERA and insolvency,” Gupta notes.
If a developer enters insolvency proceedings, buyer claims are absorbed into a collective creditor framework. Individual RERA orders lose priority.
Goel describes how this procedural overlap dilutes the speed and clarity RERA was meant to provide.
“The intended rapid relief of RERA has been slowed with the development of procedural overlap,” he says.
Even where refund orders include 8–10% interest, actual recovery depends on whether the developer has funds.
Evidence suggests that in financially stressed projects, recovery levels fall well below what orders stipulate.
WHY IMPLEMENTATION VARIES ACROSS STATES
RERA is central legislation but implemented by states.
Gupta notes that more than 30 states and UTs have operational authorities. Over 1.25 lakh projects and nearly 90,000 agents are registered.
However, implementation quality differs sharply.
“Some states such as Maharashtra and Uttar Pradesh have relatively better systems for complaint resolution,” Gupta says.
In stronger states, disposal can take three to six months. In weaker states, it can exceed a year.
Goel adds that some authorities face 20–30% vacancies in technical and legal posts.
“Moreover, the recovery of fines depends on collaboration of district collectors or revenue officers, creating additional layers,” he says.
The result is a law that is uniform in text but uneven in execution.
IS ABOLITION OF RERA THE ANSWER?
Both experts argue strongly against dismantling RERA.
“In spite of the limitations, RERA represents the most transparent regulatory regime the real estate sector in India has seen,” Gupta says.
Goel adds that before 2016, buyers faced three to seven years of litigation in consumer courts.
“In the absence of RERA, homebuyers would have to wait years for resolution. Recovery rates were much lower before 2016,” he says.
Instead of abolition, both suggest targeted reforms.
WHAT NEEDS TO CHANGE
Gupta calls for automatic recovery enforcement powers similar to revenue authorities. He also suggests better coordination with insolvency processes and mandatory disclosure of financial stress.
Goel proposes establishing a legal bridge between RERA and the IBC, creating a national centralised compliance grid, and requiring developers to report project-level cost stress beyond defined thresholds.
“If RERA is to be strengthened, reforms should centre around enforcement autonomy, financial monitoring and inter-law coherence,” Goel says.
Nearly a decade after its introduction, RERA has undeniably formalised a once opaque sector. It has introduced escrow discipline, disclosure norms and a specialised dispute resolution framework.
But enforcement deficits, insolvency overlaps and uneven state capacity have blunted its impact.
The Supreme Court’s remarks reflect frustration with these gaps.
Whether RERA has lost its bite, or whether enforcement has failed to support it, remains the central question.
For homebuyers, the difference is not theoretical. It is financial and personal.
The debate now is not whether RERA was needed. It clearly was.
The question is whether India chooses to dismantle a flawed but structured regulator, or strengthen it to fulfil the purpose it was created to serve.
