The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted with the objective of bringing transparency, accountability, and efficiency to the Indian real estate sector. However, recent observations by the Supreme Court have highlighted significant concerns regarding its implementation and effectiveness. This article delves into the Supreme Court’s critique, examines the challenges hindering RERA’s optimal functioning, and explores potential measures to enhance its efficacy.
Supreme Court’s Critique of RERA’s Functioning
On March 4, 2025, the Supreme Court of India expressed dissatisfaction with the performance of the Real Estate Regulatory Authority (RERA), labeling its functioning as “disappointing.” During a hearing, senior advocate K. Parameshwar argued that the RERA Act had faltered in its implementation, pointing out a “domino effect” in the real estate sector where the failure of one project adversely impacts others. He emphasized that such failures affect various stakeholders and urged the court to strengthen the regulatory framework governing the sector.
Justice Surya Kant concurred with these observations, acknowledging the disappointing performance of RERA but also noting potential resistance from states against new regulatory measures. This critique underscores the pressing need to reassess and bolster the mechanisms underpinning RERA to ensure it fulfills its foundational objectives.
Challenges Impeding RERA’s Effectiveness
Several factors contribute to the suboptimal performance of RERA:
- Non-Uniformity in Implementation
While RERA is a central legislation, its enforcement is entrusted to individual states, leading to disparities in its application. As of July 2019, states like Arunachal Pradesh, Meghalaya, Sikkim, and Nagaland had not notified the rules, and many others had yet to establish a permanent regulator, appellate authority, or dedicated website. This lack of uniformity hampers the act’s overarching goal of standardizing real estate practices across the nation.
- Limited Enforcement Powers
RERA’s reliance on developers’ voluntary compliance poses significant challenges. The authority’s limited enforcement capabilities often result in delays or non-compliance, undermining its regulatory mandate.
- Delays in Dispute Resolution
Although RERA aims to provide swift dispute resolution, the process can be protracted due to backlogs and procedural inefficiencies. Such delays deter homebuyers from seeking redressal and diminish trust in the regulatory framework.
- Exclusion of Smaller Projects
RERA mandates registration for projects exceeding 500 square meters or comprising more than eight apartments. Consequently, numerous smaller projects, especially in rural areas, remain outside its purview, leaving a segment of homebuyers unprotected.
- Dependence on Self-Disclosure
The act’s reliance on developers to self-disclose project details can lead to misinformation or concealment of critical information, compromising transparency and buyer trust.
- Regional Disparities in Implementation
The decentralized enforcement of RERA has resulted in inconsistencies across states. Some states have been proactive in establishing regulatory authorities and implementing rules, while others lag, creating a fragmented regulatory environment.
- Increased Compliance Costs
Developers often face heightened compliance costs due to stringent documentation and regulatory requirements. These costs are frequently transferred to buyers, leading to increased property prices and potential market slowdowns.
Measures to Enhance RERA’s Functioning
To address these challenges and restore confidence in the real estate sector, several measures can be considered:
- Standardization of Rules Across States
Establishing uniform guidelines and standards can mitigate disparities in RERA’s implementation. A centralized framework, complemented by state-specific nuances, would ensure consistency and clarity for all stakeholders.
- Strengthening Enforcement Mechanisms
Empowering RERA authorities with enhanced enforcement capabilities, including the authority to impose stringent penalties, can deter non-compliance and promote adherence to regulations.
- Expanding Coverage to Include Smaller Projects
Revisiting the criteria for mandatory registration to encompass smaller projects would extend protections to a broader base of homebuyers, ensuring comprehensive regulatory oversight.
- Enhancing Transparency Through Independent Audits
Implementing mandatory independent audits of project disclosures can verify the accuracy of information provided by developers, thereby bolstering transparency and buyer confidence.
- Streamlining Dispute Resolution Processes
Establishing dedicated fast-track courts or tribunals for real estate disputes can expedite resolutions, reducing backlogs and ensuring timely justice for aggrieved parties.
- Increasing Awareness Among Homebuyers
Conducting nationwide awareness campaigns can educate homebuyers about their rights under RERA, empowering them to make informed decisions and seek redressal when necessary.
- Implementing a Centralized Digital Platform
A unified digital platform for RERA registrations, grievances, and updates can enhance accessibility, streamline processes, and facilitate real-time monitoring of projects nationwide.
Conclusion
The Supreme Court’s recent observations serve as a critical reminder of the challenges facing RERA in its mission to regulate the real estate sector effectively. Addressing the identified shortcomings through comprehensive reforms and collaborative efforts between central and state authorities is imperative. By implementing the suggested measures, RERA can evolve into a robust regulatory framework that ensures transparency, protects homebuyer interests, and fosters sustainable growth in the Indian real estate sector.