'Registration meaningless': CAC member flags RERA gaps; urges mandatory declaration from builders on pending dues

NEW DELHI: A member of the government’s Central Advisory Council (CAC) has told the housing ministry that mandatory registration of real estate projects under RERA has become meaningless as it doesn’t ensure compliance or protect homebuyers. He has urged the ministry to make mandatory the submission of a “declaration” by builders and their group entities before registration of any project, confirming that all dues to buyers, the authorities and courts in other projects have been cleared.

In a letter to housing minister Manohar Lal Khattar, CAC member Abhay Upadhyay has suggested that any false declaration by builders result in such promoters being barred permanently from real estate business across India and imposition of heavy penalties on them.

Upadhyay, who also heads FPCE, a pan-India homebuyers’ organisation, has sought urgent govt intervention to plug critical gaps in the Real Estate (Regulation and Development) Act, 2016 (RERA), which continue to leave buyers vulnerable to exploitation by builders. The homebuyers’ body has urged the ministry to issue standard operating procedures (SOPs) to all state RERA bodies until formal amendments are made to the Act.

“Unlike FSSAI, where the stamp itself instills confidence that the product is safe for consumption, the RERA registration number has failed to become a symbol of trust. Instead, it has become a mere formality that builders flaunt while continuing to flout the law,” the FPCE said. It pointed out that many RERA authorities have not exercised the powers provided to them under the law to penalise errant developers or ensure compliance with their orders.

Raising the issue of builders failing to complete or inordinately delaying promised amenities such as clubhouses, swimming pools and landscaped gardens, FPCE said that the existing provisions, which deal only with compensation for delay in possession, are “grossly inadequate”. It urged the ministry to issue SOPs to RERA bodies to ensure developers deposit adequate funds in escrow accounts for completion of such amenities and also compensate buyers until these are completed and made functional.

The FPCE has further sought a clear exit policy for homebuyers to remove the uncertainty following a recent Supreme Court judgment that distinguished between ‘genuine homebuyers’ and ‘speculative investors’. It proposed that buyers be entitled to a full refund within one year of booking and a 90% refund thereafter, to ensure fairness and predictability.

It also recommended barring developers from collecting more than 75% of the unit cost, with the remaining 25% being collected only after the project is complete in all respects and completion certificate is obtained.

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