Many buyers purchase a flat to rent out or resell, not to live in. When the project is late, the builder's first reply is often: "You are an investor, not a homebuyer, so RERA does not protect you." This article explains what the Act actually says, what courts and tribunals have said, and where the real risks lie.
Short answer: The refund right in Section 18 belongs to an "allottee". The definition of allottee does not exclude people who bought for investment. What can change your position is how you bought (a registered agreement, an identified unit) and which forum you use, since consumer law and insolvency law ask different questions.
What the Act says
Section 2(d) defines "allottee" as the person to whom a plot, apartment or building has been allotted, sold (whether freehold or leasehold) or otherwise transferred by the promoter, including a person who later acquires it by sale or transfer. The only exclusion in that definition is a person to whom the unit is given on rent.
There is no wording that excludes someone because the purpose of buying was investment. Section 18(1) and Section 19(4) speak of the "allottee", and Section 31 lets "any aggrieved person" complain to the Authority.
What the Supreme Court has said about the refund right
In Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. (decided 11 November 2021), the Supreme Court described the allottee's refund right under Section 18(1) as unqualified. It quoted its own earlier decision in Imperia Structures Ltd. v. Anil Patni (2020) that RERA provides a remedy to an allottee who wishes to withdraw from the project "or claim return on his investment". That wording is about getting money back, not about the buyer's purpose.
We did not find a Supreme Court judgment squarely deciding, under RERA, whether a buyer who purchased for investment is entitled to a Section 18 refund. Please treat any claim that "the Supreme Court has settled this" with caution.
What authorities and tribunals have done
Reported decisions of State bodies lean on the statutory definition, though they turn on facts:
- MahaRERA rejected a developer's argument that complainants were "investors" rather than allottees, in a case reported in a legal commentary. The reasoning was that RERA does not distinguish between homebuyers and investors and that "allottee" is the operative term (Kamal Agrawal v. Sakla Enterprises; the commentary does not give a date).
- In another MahaRERA matter (Akshay Pandurang Manve v. The Constructions Co., date not stated in our source), a registered agreement for sale and an identified flat were held to establish allottee status even though the first payment had been framed as an investment.
- Allottee status is not unlimited. In UP, the Real Estate Appellate Tribunal (UPREAT) has reportedly held that buying "non-lockable" or virtual commercial space does not amount to buying an "apartment", so a refund complaint to UP-RERA was not maintainable (Sushma Choudhary v. WTC Noida Development Company Pvt. Ltd.; date not stated in our source). Landowners with a share in the project have been treated as promoters, not allottees (Rubina Abdul Rauf Patel v. Touchstone Builders, MahaRERA).
These summaries come from commentary, not from the orders themselves. Read the original order before relying on any of them.
Where "investor" arguments do bite
| Forum | Does investment purpose matter? | What to know |
|---|---|---|
| RERA Authority | Not by the text of Section 2(d) | The question is whether you are an allottee of a unit in a registered or registrable project |
| Consumer Commission | Often | You must qualify as a "consumer", and a builder may argue the purchase was for a commercial purpose. In Imperia the Supreme Court held consumer remedies remain available alongside RERA |
| Insolvency (IBC) | Yes | See below |
The 2025 insolvency ruling
In Mansi Brar Fernandes v. Shubha Sharma (12 September 2025, reported as 2025 INSC 1110), the Supreme Court dealt with allottees who filed insolvency applications. It held that the question is whether a buyer is a genuine homebuyer or a speculative investor, judged on the facts and the parties' intent. It listed indicators such as buy-back or assured-return arrangements replacing possession, multiple units and unrealistic returns. The Court also observed that this distinction matters at the stage of starting insolvency. It said speculative allottees can still claim their principal amount or pursue other remedies.
That case was about insolvency, not a Section 18 refund. But builders now cite the language, so a buyer with several units or an assured-return scheme should expect the argument.
Practical steps if you are an investor
- Check your documents. An Agreement for Sale for an identified unit, registered where required, is your strongest proof.
- Describe yourself accurately. Do not claim you intend to live there if that is untrue.
- Understand your scheme. Assured-return, buy-back and lease-back schemes are often documented separately. Authorities have looked at their terms.
- Pick the forum with care. A RERA complaint is usually the safer route for an investor. Do not run the same relief in two forums at once.
- Check the unit type. Commercial, serviced and "virtual" spaces may be treated differently from apartments.
- Keep records of payments to the promoter, including the builder-bank flows if you have a loan.
Common mistakes
- Assuming that an "investor" label disqualifies you automatically.
- Assuming that RERA and consumer law ask the same question.
- Taking a separate side agreement for assured returns without reading how it treats refunds.
- Delaying the written demand. Section 18(1) makes the refund payable "on demand".
Frequently asked questions
Does buying a second flat make me an investor? The Act does not say so. In an insolvency case, multiple units can be treated as a sign of speculation. For a RERA refund, it is mainly a risk of argument, not a bar.
Can a builder refuse a refund because I rented the flat out? The definition excludes a person to whom the flat is given on rent, that is, the tenant, not the owner who rents it out.
What is the amount of refund? The same as for any allottee: the amount received by the promoter for your unit with interest at the prescribed rate. See our article on how to get a full refund from a builder.
Where do I file? See our walkthrough on filing a RERA complaint online. Our article on who can file a RERA complaint covers allottees, associations and agents.
This article is for general information and is not legal advice. Laws, rules and rates differ by state and change over time. Verify before acting.