Earlier this week, the Supreme Court agreed to examine a plea seeking greater protection for homebuyers affected by stalled housing projects under controversial subvention loan schemes. The petition has urged the Centre to formulate a policy under which both builders and lenders would share the financial burden if flats are not delivered on time.The court also directed that no coercive action be taken against the petitioner, a homebuyer who claims he was forced to repay loan EMIs despite never receiving possession of the booked flat.The petition has also sought stricter enforcement of stage-linked loan disbursals to ensure funds are released only in line with construction progress.What is a subvention scheme?Under a subvention plan, banks or housing finance companies disburse the sanctioned home loan amount directly to the builder.In return, the builder agrees to pay the loan’s Equated Monthly Instalments (EMIs) on behalf of the buyer until the project is completed and possession is handed over.The model gained popularity as a “no EMI till possession” offer, allowing homebuyers to book properties without immediately bearing repayment obligations.Benefits and risks for homebuyersSubvention schemes can make homeownership more accessible by reducing the immediate financial burden on buyers and offering flexibility during the construction phase.However, they also carry significant risks. If a project is delayed or abandoned, builders may stop paying the EMIs, leaving buyers responsible for loan repayments despite not receiving possession of the property.Delays can also lead to hidden costs, financial stress, and prolonged legal disputes, making due diligence and regulatory oversight critical for protecting homebuyers.Background: NCR homebuyer crisisThe issue of subvention schemes has been at the centre of a long-running housing crisis, particularly in the National Capital Region (NCR), where thousands of homebuyers have been burdened with loan repayments despite incomplete projects.In July 2025, the Supreme Court allowed the Central Bureau of Investigation (CBI) to register 22 cases into what it described as an alleged “unholy nexus” between certain banks and real-estate developers.The investigation relates to allegations that lenders and builders colluded to disburse loans under subvention schemes while projects remained delayed or unfinished, leaving homebuyers exposed to significant financial losses.
