Indian real estate sector expects wave of reforms after SC judgment

2-judge Bench issued a wide-ranging set of 12 binding directions, including framing of specific guidelines for insolvency proceedings in real estate

Developers and legal experts believe that the Supreme Court’s Friday ruling, in which it ordered a host of reforms in the real estate sector, while describing housing a fundamental right and terming speculative buyers as a “slow poison”, will usher in a new era in the sector and instil confidence among the genuine buyers.

 

The apex court, while hearing a batch of petitions arising out of a National Company Law Appellate Tribunal (NCLAT) decision on a housing project in Greater Noida, has termed housing as a fundamental right under Article 21 of the Constitution.

 

Noting that housing is neither a luxury nor a speculative instrument, but a fundamental human need, a two-judge bench comprising justices JB Pardiwala and R Mahadevan issued a wide-ranging set of 12 binding directions, which included asking authorities to frame specific guidelines for insolvency proceedings in real estate, including timelines for project-wise CIRP and safeguards for allottees.

 

Abhishek A Rastogi, founder, Rastogi Chambers said that the SC judgment provides much-needed doctrinal clarity by carving out the category of speculative investors from genuine homebuyers under the IBC framework. 

 

“The way forward now lies in a fact-sensitive application of this principle so that bona fide buyers, who often sign builder-dictated agreements, are not unfairly excluded,” he added. 

 

The SC also directed the government to start filing of vacancies in NCLT/NCLAT and state Real Estate Regulatory Authority (Rera) bodies on a war footing, along with constitution of dedicated IBC benches with additional strength.

 

Sujay Kalele, founder-MD at TRU Realty said that the court’s directions to fill vacancies in Rera and NCLT on a war footing will cut down delays and systemic bottlenecks that have long penalised honest developers. 

 

“With over 4.12 lakh new housing units launched across the top seven Indian cities in 2024, buyers’ demand remains robust, but regulatory gaps and stalled projects continue to pose challenges, making these reforms both urgent and necessary,” he added.

 

The government has also been told to file a compliance report on measures taken to upgrade NCLT/NCLAT infrastructure nationwide, within three months.  

 

While developers have welcomed the move, they also demanded that stakeholders be involved in all steps taken to improve real estate sector policies. 

 

Tarun Bhatia, vice chairman, NAR India said that any improvements to the Rera Act or related real estate policies must be done in active partnership with the industry, bringing together developers, realtors, homebuyer associations, financial institutions, legal experts, and government regulators. 

 

“Such collaborations will be key to ensuring that reforms are both practical and future ready, striking the right balance between consumer protection and ease of doing business,” he added.

 

To this end, the Centre has been tasked with creating a committee within three months to suggest commercially viable systemic reforms for cleansing and infusing credibility into the real estate sector.

 

The committee, chaired by a retired High Court judge, will include representation from the law and housing ministries, domain experts in real estate, finance and IBC as well as two eminent industry representatives.

 

Experts add that the implications of this ruling are twofold: it safeguards the integrity of the IBC as a collective resolution mechanism while reaffirming housing as a Constitutional right under Article 21. 

 

Kushagr Ansal, director at Ansal Housing said that safeguarding homebuyers’ interests, ensuring timely project completion and strengthening Rera will restore trust and confidence in housing as a fundamental right.

 

Salil Kumar, director for marketing and business management at CRC Group added that these measures will “improve transparency, accelerate delivery, and strengthen buyer confidence, setting the foundation for sustainable growth in the sector.”

 

Rastogi, however, added that a consistent application by NCLTs and coordination with Rera will be critical to ensure that the balance struck by the apex court translates into real protection for stakeholders in the real estate sector.

 

Calling the ruling a significant step forward for India’s housing market, G Hari Babu, national president of Naredco – an industry association for real estate-- said that project-wise insolvency proceedings and escrow accounts for early-stage projects will safeguard the investments of genuine homebuyers while curbing speculative practices that have delayed many developments.

 

“Technology-led practices such as digital escrow tracking, online project monitoring, and transparent disclosure systems will play a vital role in implementing the court’s vision. It will also boost global investor confidence,” Kalele added.

 

Industry players also welcomed the court’s decision to consider establishing a revival fund under the National Asset Reconstruction Company Limited (NARCL) or expanding the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund to provide bridge financing for stressed projects undergoing insolvency.  

 

“The directives to enhance last-mile funding, consider revival funds, and systemic reforms across the sector are expected to revive stalled projects, improve accountability, and accelerate the delivery of affordable and mid-income housing,” Babu said.  

What industry is saying

• SC has given “much-needed doctrinal clarity” by separating speculative investors from genuine homebuyers
• Directions to fill vacancies in Rera and NCLT on a war footing will reduce delays and systemic bottlenecks
• Project-wise insolvency proceedings and escrow accounts for early-stage projects will protect homebuyers
• Ruling safeguards IBC’s integrity as a collective resolution mechanism
• Developers have also demanded stakeholders’ involvement in all steps taken to improve sector-specific policies