Expertise Crisis
The Supreme Court’s harsh words for the institution of real estate regulatory authorities (RERAs) should be taken as well-intentioned admonition. Chief Justice Surya Kant’s oral remarks last week were scathing and carried the weight of unfulfilled promises for a quasi-judicial body set up nine years ago amidst a near breakdown of trust, transparency, and discipline in this vital sector. The CJI observed that RERA appeared to be doing little beyond “facilitating defaulting builders”. Out of apparent exasperation, the apex court said it would not even mind if the institution were abolished. In September 2025 too, the SC had similarly critiqued RERAs’ functioning, and observed that they had become “rehabilitation centres” for former bureaucrats, “who have frustrated the entire scheme of (the RERA Act, 2016)”.
To be sure, although a legally empowered regulatory set-up for India’s fast-growing real estate sector should have been in place much earlier, RERA was created in 2017 after legions of poignant stories about homebuyers being taken for a ride by unscrupulous builders and developers. The sector had come to be riddled with a huge information asymmetry and an absence of transparency that tipped the scales hugely in favour of the builders. Most projects were inordinately delayed, and possession timelines were missed by wide margins. In many instances, builders merrily diverted funds from one project to another, or even appropriated them through benami means. Things came to such a pass that the apex court had to take over some of the collapsed projects and direct state-owned companies to complete them, to offer a modicum of justice to the homebuyers.
Enforcement Mirage
The public outcry ensured quick establishment of RERAs. Projects above specified thresholds are required to be registered with the RERA and every prospective buyer now has got access to about 110 project-related parameters published on RERA websites. Builders are required to deposit 70% of the money collected from homebuyers in an escrow account. While the start was reassuring, many of these bodies have quickly relapsed into complacency and malfeasance. According to homebuyers’ bodies, there is still no certainty that RERA-registered projects will be completed on time or that promises made to homebuyers will be fulfilled. These regulators have steadily relinquished the adjudicating authority they are supposed to wield. Instead of standing vigil and proactively enforcing justiciable orders, they often act as benign arbitrators brokering “settlements”.
The importance of effectively regulating the sector cannot be overstated. Over 75% of household assets in India are held in real estate. In the 10 years to March 2025, outstanding individual home loans have risen four times to Rs 37 lakh crore, and the home loans-to-GDP ratio has grown from 8% to 11%. After the Covid-induced lull, the housing sector has seen a sustained upcycle. Policy initiatives like the “Housing for All” mission and interest subventions have strengthened access to housing finance. Demand in tier-II and -III cities has surged, while it is forecast that 40% of the population will be living in urban centres by 2030. Of late, the housing market has shifted from volume- to value-driven growth, but the overall demand is seen to stay strong in the next decade. A higher degree of integrity and accountability among real estate regulators and greater standardisation of their functional parameters are essential for the orderly growth of the housing sector. The judiciary had to intervene as the political will doesn’t appear to be strong enough.