NEW DELHI: The Federation of People’s Collective Efforts (FPCE) has called for amendments to the real estate law ‘RERA’ to implement a mechanism for verifying builders’ track records prior to granting project approvals.
Additionally, the FPCE is advocating for new provisions to ensure compensation for homebuyers if builders fail to deliver promised facilities and amenities.
The association has also requested a standardized rule regarding refunds in the event of unit cancellations by property buyers.
FPCE President Abhay Upadhyay has addressed a letter to Union Minister of Housing and Urban Affairs, Manohar Lal, proposing amendments to the Real Estate (Regulation and Development) Act, 2016 (RERA) to bolster consumer protection measures.
In his correspondence, Upadhyay, who serves on the Central Advisory Council for RERA established by the ministry, emphasized critical flaws in RERA that are unjust to homebuyers nationwide.
The association recommended a dedicated section in the Act to tackle cases of builders failing to provide promised amenities and facilities.
Given that amendments may take time, the FPCE urged the ministry to issue a standard operating procedure (SOP) for all RERA authorities to ensure builders deposit sufficient funds into an escrow account for completing outstanding facilities. Regulators should oversee and enforce timely completion of these projects.
Moreover, the FPCE pointed out the absence of a mechanism to verify a promoter’s history prior to the approval of new projects.
Currently, RERA authorities do not check whether a promoter has settled all dues to allottees of previous projects or any claims from various legal or quasi-judicial bodies.
Consequently, Upadhyay remarked, “Developers with poor track records are permitted to launch new projects, thereby perpetuating injustice to new buyers.”
He suggested that the ministry require all RERA authorities to obtain a declaration from promoters before allowing the registration of any new project.
In this declaration, promoters must confirm they have settled all dues owed to allottees, including payments mandated by legal or quasi-judicial orders across India.
Additionally, they should declare the settlement of all dues to any governing authorities or forums, including penalties imposed by such entities, the FPCE noted.
The declaration should extend to not only the promoter company but also to affiliated companies under the same brand; entities sharing promoters or shareholders, the FPCE added.
If a promoter submits a false declaration, there should be legal provisions to permanently prohibit them from engaging in real estate activities throughout India.
“These gaps necessitate immediate policy intervention either through amendments to the Act or temporary Standard Operating Procedures (SOPs) for state RERA Authorities,” Upadhyay stated in his letter.
The FPCE president emphasized that this is a critical reminder for the ministry.
“Builders are aggressively exploiting homebuyers by delaying project completion, misappropriating funds, and breaching agreements, all while RERA authorities look on…,” he asserted.
Upadhyay lamented that many authorities act as passive observers despite having substantial powers under the RERA Act to investigate, penalize, and issue binding orders.
“Their inaction and silence regarding obvious violations raise significant concerns about their regulatory commitment and, in some cases, suggest a troubling alliance that protects errant builders from accountability,” the president stated.
He noted that the RERA registration number has not gained the trust of consumers; “Unlike FSSAI, where the certification ensures product safety, the RERA registration number has failed to instill confidence.”
In his letter, Upadhyay observed that state RERA authorities have not curbed exploitative behavior, making it urgent for the Union ministry to take action.
