India’s homebuyers are calling for stronger safeguards against repeat defaulters. On October 26, 2024, the Forum for People’s Collective Efforts (FPCE) wrote to Union Housing Minister Manohar Lal seeking amendments to the Real Estate (Regulation and Development) Act, 2016. FPCE president Abhay Upadhyay, who also serves on RERA’s Central Advisory Council, urged mandatory verification of developers’ past performance before project approval, warning that many defaulters rebrand and re-enter the market unchecked.

Breakdown

The Problem in Numbers:
The scale of India’s housing crisis underscores FPCE’s concern. As of 2024, about 500,000 homes worth ₹4.48 lakh crore remain stuck across major metros, according to Anarock. PropEquity data shows nearly 2,000 stalled projects across 44 cities, with delays rising nine percent since 2018. The National Capital Region alone accounts for 240,000 stuck units worth ₹1.8 lakh crore. Maharashtra and Karnataka follow, with thousands of project lapses, refund backlogs, and unpaid buyer dues. Nationwide, over 50,000 real estate complaints remain pending before consumer forums.

What FPCE Wants:
FPCE’s proposal focuses on three main reforms.

• Pre-Launch Verification: RERA authorities would vet a developer’s finances, litigation record, and delivery history before approving new projects. The verification would extend to group companies under the same promoters or brand names.
  
• Guaranteed Compensation: Builders who fail to provide promised amenities such as clubhouses, parks, or parking would compensate buyers through funds held in monitored escrow accounts.
  
• Uniform Refund Policy: A national rule would require full refunds within 15 days for cancellations within three months and refunds with interest within one month thereafter.

Upadhyay said many developers are “openly exploiting buyers and misusing funds while RERA authorities remain passive spectators.”

Implementation Challenges:
Even if FPCE’s proposal gains traction, major obstacles remain. RERA capacity and enforcement vary widely across states. Maharashtra’s MahaRERA has recovered ₹200 crore from defaulters but still trails far behind the ₹705 crore in issued warrants. West Bengal’s RERA was non-functional for over a year after its state law was struck down, leaving buyers without recourse.

A national pre-approval vetting system could overburden regulators already managing large caseloads and increase compliance costs for smaller developers. The escrow requirement for amenities could also raise project costs, potentially affecting affordability in an already strained market.

The Developer View:
Developers, represented by CREDAI, argue that approval delays from civic bodies are the real reason for project slowdowns. They have sought “deemed approvals” and more flexibility in using project funds. The divide remains sharp: developers blame bureaucracy and financing constraints, while homebuyers point to fund diversion and poor governance.

International Context:
Several countries have tried similar systems with mixed results. Singapore’s Housing Developers Act mandates licensing based on financial health and past conduct, backed by strict centralized oversight. The United Kingdom’s New Homes Quality Code enforces builder accountability but is voluntary, limiting its impact. Australia’s state-level licensing frameworks have struggled to prevent repeated construction failures, showing that registration alone cannot ensure quality without consistent enforcement.

The Path Forward:
The Union Housing Ministry has not yet responded to FPCE’s recommendations. As an interim step, FPCE suggests the ministry issue Standard Operating Procedures to RERA authorities for pre-approval verification while legislative amendments are considered. Long-term reform will require adequate funding, skilled staff, transparent digital infrastructure, and balanced rules that protect buyers without stifling credible smaller developers.

India’s housing credibility is now essential infrastructure. If urbanization continues at its current pace, with the urban population projected to reach 600 million by 2030, regulators must restore trust before the market scales further. Buyers stuck in decade-long delays not only lose money but also pay rent while servicing home loans, eroding faith in homeownership itself.

Why This Matters

India’s real estate market, projected to touch USD 1 trillion by 2030, depends on restoring credibility. More than 76,000 projects have registered under RERA since 2016, but trust remains fragile. FPCE’s proposal marks a shift from RERA’s reactive complaint handling to proactive prevention. As Upadhyay noted, “RERA registration should become a mark of trust like the FSSAI logo in food safety.” For that to happen, RERA must represent verified integrity, not just compliance paperwork.

The Bigger Picture

The housing sector now sits at the intersection of India’s economic and urban transformation. The government’s Smart Cities Mission and Affordable Housing initiatives depend on credible developers and transparent regulation. Strengthening RERA could turn it into a model for governance reform in other industries where public trust is key. If executed well, a national builder verification framework could integrate transparency into India’s infrastructure governance and demonstrate that regulation and growth can coexist.

The Crunch

RERA brought transparency to India’s property market but now faces its toughest test. With half a million homes delayed and buyer trust fading, policymakers must decide whether to prioritize consumer protection or ease developer compliance. FPCE’s pre-approval verification model offers a credible path forward if paired with genuine enforcement and transparency. Without reform, India risks a housing market that traps families in uncertainty and weakens the very foundation of its urban growth.