On December 19, citing sources, Moneycontrol reported that the Uttar Pradesh (UP) Cabinet had approved the recommendations of the Amitabh Kant committee on legacy stalled projects.
The recommendations called for a slew of relaxations for homebuyers and developers, including a zero period to waive interest and penalties imposed for financial defaults.
Speaking after the cabinet meeting, Suresh Kumar Khanna, the state finance minister, said one of the committee's accepted suggestions was for homebuyers to take possession of their apartments and complete registry.
What did the Amitabh Kant committee recommend?
An official order is still pending from the UP government. However, Khanna said that the committee had recommended that the registry and sub-lease deeds of homebuyers be executed immediately.
What is a zero period and how does it work?
According to the panel’s proposal, a zero period will be given for the period between April 1, 2020 and March 31, 2022, due to COVID-19 disruptions faced by the real estate projects.
The pandemic stalled new real estate launches and halted ongoing construction—delaying several projects across India.
To date, real estate developers collectively owe around Rs 46,000 crore to the development authorities in Gautam Budh Nagar, UP. They owe almost Rs 26,000 crore to the Noida Authority and about Rs 14,000 crore to the Greater Noida Authority. The dues to the Yamuna Expressway Authority stand at Rs 4,700 crore.
Under the zero period policy, the government can waive penal interest and other dues on projects mired in legal disputes or land-related issues. The policy will apply only if developers agree to complete the projects in a specified time.
Thus, the penalties waived by the government will significantly reduce the total dues of the developers.
How will homebuyers benefit from the decision?
The decision is likely to directly impact most homebuyers in UP who have been handed over possession but are still waiting for registry of their apartments.
Some, like Deepak Dayal, who invested almost Rs 1.4 crore, have been waiting for apartment registration to be completed for the last six years.
Rajiva Singh, president of the Noida Federation of Apartment Owners Associations (NOFAA), believes that this is one of the immediate impacts of the decision, with 1.9 lakh stressed inventories in Noida itself.
The implementation of these recommendations will protect the interests of homebuyers as it will help in the completion of stalled legacy projects and will also ensure timely delivery of houses under delayed projects.
How will it impact developers?
With pending dues, developers often fail to complete a project within the stipulated time or even complete the registration for that matter, experts say.
Thanks to the relaxation of the financial burden offered in the recommendations, developers will be able to complete their stalled projects.
"Authorities receive dues, and state exchequers benefit from increased revenues from the registration of properties. The move will also help many developers turn net positive. This decision creates a conducive and mutually beneficial environment for the growth of the NCR real estate sector," Amit Modi, Director of County Group, said.
Real estate consultant ANAROCK notes that Noida and Greater Noida in UP had the maximum concentration of stalled and delayed residential projects in the country. Both these areas account for more than 35 percent of the total delayed units across the top seven cities.
Manoj Gaur, president of CREDAI NCR, and CMD of Gaurs Group, feels that the decision directly benefits a substantial number of the 2.4 lakh homebuyers in the National Capital Region (NCR).
“Recognising and addressing the concerns of the developer community, the government has not only alleviated financial pressures but has also conveyed a strong and optimistic message to the entire real estate industry," he added.
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