Supreme Court Declares Right to Housing as Fundamental Right, Issues 12 Directions for Real Estate Reform
The Supreme Court of India has declared the right to housing as a fundamental right under Article 21, issuing 12 directions to protect genuine home buyers and restore credibility in the real estate market.
Real EstateHousing RightsSupreme CourtReraIbcReal EstateSep 13, 2025
While dismissing four appeals filed by home buyers against a developer, the court highlighted the importance of genuine home buyers, such as teachers, IT professionals, and salaried workers, who often pour their life savings into unfinished projects. The court observed that a home is more than just a roof over one’s head; it is a reflection of one’s hopes and dreams. The anxiety of not having a home despite paying a fortune erodes dignity, health, and productivity.
The court's directions aim to strengthen the National Company Law Tribunal (NCLT), the Real Estate Regulatory Authority (RERA), and ensure that funds are audited by the Comptroller and Auditor General (CAG). The court stressed the need to fill vacancies in the NCLT and NCLAT on a war footing and upgrade infrastructure to prevent issues like the recent closure of the Chandigarh NCLT due to water seepage.
The court also called for systemic reforms in the real estate sector. It directed the formation of a committee headed by a retired high court judge to suggest measures to cleanse the sector. RERA must be strengthened, and project approvals should only be granted after thorough diligence. Failure to do so will result in strict legal intervention.
The court directed the creation of a revival fund or the strengthening of the existing SWAMIH (Special Window for Affordable and Mid-Income Housing Investment) Fund to provide bridge financing for projects undergoing liquidation. The SWAMIH Fund is a commendable initiative, and the CAG will conduct periodic audits to ensure accountability.
The court also mandated the framing of standard operating procedures for handling sale proceeds, with any payment exceeding 20 percent of a property’s cost being mandatorily registered. The state has a constitutional duty to ensure that housing remains affordable and accessible. Article 21 mandates timely possession of homes, and the government must ensure that developers do not defraud or exploit home buyers.
The court emphasized that home buying is a fundamental human need, not a mere commercial deal or speculative activity. The government has a constitutional obligation to prevent such crises, as seen in Western countries, where housing shortages have led to caps on the number of homes a person can own.
The heart of the dispute was how the Insolvency and Bankruptcy Code (IBC) treats home buyers. In 2018, the Supreme Court recognized genuine allottees as financial creditors, giving them the same rights as banks to initiate insolvency proceedings if developers defaulted. However, speculative investors were not recognized within this framework. Speculative investors, who seek high profits and refunds, were found to be abusing the system, leading to the IBC being misused.
The court noted that speculative arrangements distort the market, artificially inflate demand, and undermine the interests of genuine buyers. These arrangements enable developers to mislead gullible individuals and seasoned investors to hold developers to ransom by invoking the IBC as a coercive recovery mechanism. The court's ruling aims to prevent such abuses and protect the interests of genuine home buyers.
Frequently Asked Questions
What is the significance of the Supreme Court's ruling on the right to housing?
The Supreme Court's ruling declares the right to housing as a fundamental right under Article 21, emphasizing the importance of timely and secure possession of homes for genuine buyers.
What are the 12 directions issued by the Supreme Court to the government?
The 12 directions include strengthening NCLT and RERA, filling vacancies in tribunals, conducting CAG audits, forming a committee for sector reforms, creating a revival fund, and framing standard operating procedures for sale proceeds.
Who are considered genuine home buyers, and why are they protected under the IBC?
Genuine home buyers are individuals like teachers, IT professionals, and salaried workers who invest their savings in homes with the intention of occupying them. They are protected under the IBC to ensure timely possession and prevent exploitation.
What is the role of RERA in the real estate sector?
RERA (Real Estate Regulatory Authority) is responsible for regulating the real estate sector, ensuring transparency, and protecting the interests of home buyers. It must be strengthened to prevent fraud and ensure compliance with regulations.
How does the court define speculative investors, and why are they not protected under the IBC?
Speculative investors are those who seek high profits and refunds from their investments in homes without the intention of occupying them. They are not protected under the IBC to prevent the misuse of the insolvency process.
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