Coronavirus impact: UPRERA to take decision on extending project delivery timelines soon

UP RERA also asked erring developers to give details of properties that can be auctioned

UPRERA is expected to take a decision on extending delivery timelines of real estate projects soon and is currently awaiting clarity on the duration of the lockdown, top sources said.

“There has been a complete lockdown and naturally all deadlines will get affected. Having said that, there is a need for clarity on the duration - the effect and how long it will last - before a decision is taken. At this stage putting any period is ad hoc. So we would wait for a while as one thing is certain that nothing is happening during the lockdown,” UPRERA Chairperson Rajiv Kumar told Moneycontrol.

The move follows an appeal from bodies of real estate developers, Credai and Naredco, that the delivery timelines be relaxed on account of the lockdown imposed following the outbreak of COVID-19.

The Uttar Pradesh government on April 8 said that all COVID-19 hotspots in 15 districts will be sealed until April 15.

So far, both Karnataka Real Estate Regulatory Authority and the Maharashtra Real Estate Regulatory Authority (MahaRERA) have extended the validity period for registration of real estate projects by three months.

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“The decision taken by MahaRERA with respect to extending the deadline is something which is reasonable but we would want to be clear about the duration of the lockdown rather than putting an ad hoc number at this stage. At this stage we should wait for at least a week or so,” Kumar told Moneycontrol.

Experts said that the authority may be adopting a wait and watch approach because in case the lockdown is removed in certain areas and continued in others, then there may not be a justification for a uniform decision for all projects across regions.

Several developers in NCR have approached UPRERA to extend the timelines and delay the recovery notices issued to the realtors by at least six months in light of the outbreak of coronavirus pandemic.

Builders have said that they have to comply with RERA rules and renew the registration of a housing project once it expires. But builders, whose registration date has by now expired, cannot do so due to the lockdown. Neither can they obtain registration for old projects.

UPRERA also has a role in managing escrow accounts, which were opened to regulate the use of funds collected from buyers. Builders have requested that the escrow accounts operations should be continued as they have to pay the salary of the staff and also taxes.

Builders have said that no order of refund or recovery be issued to them for a minimum period of six months as their cash flows have been impacted on account of COVID-19, UP Naredco had said in a statement.

All cases pending with UPRERA be adjourned and to be taken up after three months with opportunity for both petitioners and the defendants to settle out of the court and withdraw complaint during the intervening period of three months, UP chapter of Naredco had said in a representation to UPRERA.

“We hereby appeal that considering the situation wherein the financial markets have collapsed and progress and growth have come to a standstill and it will take a long time to recover, the RERA orders requiring refund with interest at MCLR+1% and penalty should be reviewed and the orders be set aside, giving an opportunity to the developers to advance completion and delivery dates so that the developer can complete the projects and handover the delivery of flats to its buyers by the revised dates,” it had said.

The developers had requested that UPRERA set aside these orders and provide revised dates for completion and possession for homebuyers.

It has also demanded that the operations of the designated escrow accounts should not be blocked for at least a quarter in the event of non-compliance or delays in compliance by the promoter due to COVID-19.

With regard to the developers’ demand that no order of refund or recovery be issued to them for a minimum period of six months, experts said that recovery notices by RERA authorities to builders have all been issued before the lockdown and that too after being served several notices.

“It’s not that the recovery notices are being generated during the period of the lockdown. A certain period of time is granted for the process of compliance and if that is not completed, then a 15-day notice is issued to the concerned parties. If that too is not complied with, a recovery certificate is sent after all other modes are exhausted. Whatever recovery certificates have been issued, those are all prior to the lockdown and after a due process has been followed. They (developers) should have complied with the order earlier or obtained a stay against it,” experts told Moneycontrol.