SHOULD RERA BE REPEALED?         

Why we are discussing this topic?

The Supreme Court in THE STATE OF HIMACHAL PRADESH vs. NARESH SHARMA| SLP(C) No. 005835 – / 2026

CJI Surya Kant said It is high time that all the states should revisit and rethink constituting this authority,”

The CJI further remarked that the RERA was not doing any other services except to facilitate builders in default.

Let’s study pros and Cons.

RERA is useful and effective:

The Real Estate (Regulation and Development) Act, 2016 (RERA) brings accountability, transparency, and efficiency to the Indian real estate sector, primarily protecting homebuyers. Key benefits include

mandatory project registration, standardized carpet area definitions, 70% of funds kept in an escrow account to prevent diversion, guaranteed timely delivery, and a 5-year defect liability period.

Major Positive Points of RERA:

 Transparency and Disclosure: Promoters must disclose project plans, layout, land title status, and timeline on the RERA website, giving buyers access to verified information.

Protection of Funds: Developers are required to deposit 70% of all project funds into a dedicated bank account, ensuring money is only used for that specific project, reducing insolvency risk.

Standardized Carpet Area: RERA eliminates confusion by defining “carpet area” clearly, ensuring buyers pay only for the actual usable space, not for common areas or super built-up areas. Builders were selling units/galas/flats even on Super Built Up basis.

Timely Delivery and Penalties: Projects must be completed on time. If a developer delays possession, they are liable to pay interest on the amount paid by the buyer, matching the interest rate for buyer default.

 Defect Liability Period: Builders are responsible for rectifying any structural defects or quality issues reported within 5 years of possession at no extra cost.

 Reduced Fraud and Misleading Ads: All advertising must adhere to the registered project details. False promises or misleading marketing can lead to penalties.

Redressal Mechanism: RERA authorities provide a fast-track, organized, and legal mechanism for settling disputes between buyers, developers, and agents.

Consent for Changes: Developers cannot change plans or structure without the consent of two-thirds of the homebuyers.

Concluding Notes:

RERA has significantly improved buyer confidence, increased project efficiency, and bYes—**before the introduction of RERA in India**, this kind of malpractice was unfortunately quite common in the real estate sector.

ROLE OF REAL ESTATE REGULATORY AUTHORITY (INDIA)

Before RERA came into force (around 2016–2017), there was no strong centralized regulator, which allowed many builders to exploit buyers.

What Used to Happen Before RERA

  1. Blank or Incomplete Agreements
  • Builders often made buyers sign blank or partially filled agreements
  • Later, terms were changed without the buyer’s consent.
  • Buyers had little legal protection.
  1. Multiple Sales of the Same Flat. Blank document was signed and genuine buyer in possession was not aware of the same. Some builders sold **one flat to 5–10 people** using:
  • Duplicate allotment letters
  • Fake agreements
  • Backdated documents
  • Especially common when buyers paid in cash or instalments.
  1. Mix of Investors and Loan Buyers: Builder was taking loans from investors in cash against blank agreement. Such funds were cash. Investors were given early “soft bookings” without registration. Genuine buyers took bank loans based on builder documents.
  • Banks often relied on builder reputation, not verified ownership.
  • This led to multiple claims on the same property.
  1. 4. Delayed or No Possession
  • Even after full payment, possession was delayed for years.
  • Some projects were abandoned after collecting money.

Why This Was Possible

Before RERA: No mandatory project registration

  • No public database
  • No escrow account for buyer funds
  • Weak penalties
  • Poor transparency

This boosted confidence of the builders to misuse funds and documents easily.

How RERA Changed This

After RERA:

  • Mandatory project registration
  • One flat = one registered allotment
  • 70% money kept in escrow
  • Public access to project details
  • Heavy penalties for fraud

Now, selling one flat to multiple people is a serious criminal offence.

Now let us see the other side of the coin.

Key Negative Aspects of RERA:

  • Higher Compliance Costs and Reduced Liquidity: Developers must deposit 70% of funds into a separate escrow account, severely restricting cash flow for construction. Compliance with registration and documentation increases operational costs, which may be passed on to buyers.
  • Delays in Approvals and Projects: The need for multiple approvals before launching projects can lead to bureaucratic delays. If projects are delayed by authorities, it still disrupts developer timelines, potentially leading to further project delays.
  • Limited Impact on Existing/Old Projects: RERA does not effectively cover many projects initiated before May 2017, leaving buyers in those developments still struggling with slow legal remedies.
  • Inconsistent Implementation: The autonomy given to states has led to varied enforcement, with some states diluting rules, creating confusion for developers and buyers operating across different regions.
  • High Penalties and Small Developer Exit: High penalties for non-compliance (up to 10% of project cost) and rigorous requirements have forced many smaller developers to exit the industry, reducing market competition.

Impact on Stakeholders:

  • For Buyers: While RERA offers protection, it can lead to higher property prices due to increased costs for developers, and in some cases, limited new supply from smaller developers leaving the market.
  • For Developers: The rigid, bureaucratic, and capital-intensive nature of compliance causes significant hardships, particularly for smaller, less-resourced players.
  • For the Industry: The focus on compliance over speed can slow down project launches and, in some cases, hinder, rather than help, sector growth, especially when combined with external economic factors.

Summary Conclusion:

RERA a very useful law. If any changes are required must be made

18th February 2026

Shruti Desai