RERA Under Fire: Supreme Court Signals Urgent Reform Needed

The Supreme Court on Thursday delivered a sharp indictment of the functioning of Real Estate Regulatory Authorities (RERA) across the country, observing that the institution, set up to protect homebuyers, appears to be “doing nothing except facilitating defaulting builders.” A bench of Chief Justice Surya Kant and Justice Joymalya Bagchi made the remarks while hearing a plea by the Himachal Pradesh government challenging a High Court order that had stayed the shifting of the state RERA office from Shimla to Dharamshala. The Chief Justice said it was “high time” that states revisited and rethought the manner in which RERA authorities were constituted and functioning, adding that the court would not mind if the institution was abolished if it continued to fail in delivering effective relief.

The court’s observations reflected growing judicial concern over the gap between the promise and performance of RERA nearly a decade after its enactment. The Real Estate (Regulation and Development) Act, 2016 was introduced as a landmark reform to bring transparency, accountability and discipline to India’s real estate sector, long plagued by project delays and fund diversion. The law mandates compulsory registration of projects , requires developers to deposit 70 per cent of project funds in escrow accounts , prescribes strict disclosure norms, and provides a time-bound dispute-resolution mechanism intended to deliver relief to homebuyers.

However, despite these safeguards, implementation has been uneven across states. Several RERA bodies face mounting backlogs of complaints , infrastructural constraints and vacancies. While many authorities have passed orders directing refunds, interest payments and penalties against errant developers, enforcement of those orders remains slow , often forcing aggrieved buyers to approach higher courts. The bench noted that the very people for whom RERA was created were “completely depressed, disgusted and disappointed” because they were not receiving meaningful or timely relief.

During the hearing, the court also questioned the practice of appointing retired bureaucrats to head such regulatory bodies, with the Chief Justice remarking that in many states these authorities had become “rehabilitation centres.” He suggested that domain experts with knowledge of urban planning and local conditions might be better suited to strengthen regulatory oversight and ensure effective functioning.

In the Himachal Pradesh matter, the state government argued that the decision to shift the RERA office from Shimla to Dharamshala was taken on administrative grounds to decongest Shimla and promote development in other cities. The High Court had stayed the relocation in June 2025 and continued the interim order on December 30, 2025. On Thursday, the apex court stayed the High Court’s December 30 direction and permitted the state to shift the office to a place of its choice, subject to the final outcome of the pending writ petition.

The Supreme Court’s strong remarks are likely to reignite debate on structural and functional gaps in RERA’s implementation nationwide , and whether deeper reforms are needed to restore homebuyer confidence in the regulatory framework.