The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) intends to review projects by over a 100 developers that have been ‘extremely delayed’ by three to six years over the next few months and plans to deregister or take over the projects if the concerned builders do not come around to finish them, UP RERA sources said.
“We will be calling over a 100 developers on a Wednesday or Thursday over the next few months to review their delayed projects. We will also take a fresh timelines from them to know exactly by when they intend completing the projects. The process will be on for the next two months,” Balwinder Kumar, member of UP RERA bench told Moneycontrol.
“We are hopeful that by the next fortnight we would have reviewed the progress of almost 70 percent of all the delayed projects. As many as 100 builders have defaulted in the UP NCR region with their projects having been delayed by three to six years on an average. If they do not come around and complete the projects, we will go ahead and deregister or take over the projects,” he says.
“We have decided that if there is no progress and if the builder fails to deliver projects or fails to show his keenness to deliver flats, if he does not resume construction or is absconding or in jail, we will issue show cause notice to deregister their projects and take over their projects.
"There are several options before us – we may ask buyers’ associations to complete it, induct a third party by getting in a co-developer, or we may ask NBCC or any other public sector undertaking to take over the projects. Part funding will come from buyers and in case of some projects realised from selling the vacant land or constructing additional flats by utilising the additional floor area ratio available,” he said.
“We are hopeful that we will be able to deliver almost 30,000 delayed units by end of next year up to December 2019,” he says.
Kumar said that the Authority has also started the process of identifying stuck housing projects in Noida, Greater Noida and other cities. Once these are identified, will be prepare a list of projects that have been abandoned due to financial constraints or cases where the builders are absconding.
At a meeting held last week, the Greater Noida bench of the Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) had ordered seven Noida-based developers to speed up completion of over 20,000 flats that are behind schedule by at least three to six years. The order followed a survey by UP-Rera that found that more than 21,000 apartments in residential projects by Logix group, Today Homes, Rudra Buildwell, Omaxe, Supertech, Mascot Homes among others were ‘extremely delayed’.
UP Rera has been hearing cases since September 4. It has conducted forensic audit of over a dozen builders facing fund diversion allegations
In October, the Uttar Pradesh Real Estate Regulatory Authority (RERA) for the first time had asked over 700 home buyers of Subhkamna Tech Home to come up with a proposal to complete the project they had invested in and get the consent of at least 60 percent buyers.
The project was due for delivery in 2014. Almost 70 percent of the work on the towers was complete and buyers had claimed they have paid about 80 percent of the amount. The project is located in Sector 137, Noida.
However, buyers could not start work on the project due to the intervention of the National Company Law Tribunal (NCLT). On November 26, 2018, NCLT admitted a petition by the contractor Concord Infrastructure Private Limited under the Insolvency and Bankruptcy Code 2016. It appointed an interim resolution professional for Shubhkamna Buildtech that had failed to pay dues over 2 crore to the contractor. Following this, UP RERA has decided to take up the matter with the central government.
In April this year, Madhya Pradesh Real Estate Regulatory Authority (RERA) in another first, had come to the rescue of as many as 800 allottees of a project located in Indore whose promoter has been absconding for over three years. It had planned to facilitate completion of the project by constituting a committee of buyers who will get the “finishing work” done by pooling in the amount due from them.
“We are planning on taking up only such towers where work is more than 80 percent complete. In most towers for this particular project, last mile work is left,” Madhya Pradesh RERA Chairman Anthony DeSa had then told Moneycontrol.
When approached for his comment, DeSa said while it is a “good start,” there are several challenges, the foremost being that of funding. In the Indore matter, the promoter has been arrested and served summons to be heard. The High Court too has passed a few orders and formed a committee to deal with the project. In a similar matter in Gwalior, “we were unable to get all allottees on board,” he says.
RERA Section 8 provides an indication that the Authority can provide a platform to take up stressed projects and bring them to completion. However, greater clarity is required because the provisions as they stand at the moment seem restrictive and can be implemented only under certain circumstances, he said.
Clarity is required on what percentage of homebuyers need to come together and even if they do, there has to be complete agreement among them because there is always a danger of the remaining not cooperating or not making payments.
If a stressed project is to be taken up and completed, all three parties have to agree to take a haircut – the buyers may have to give up all claims for compensation, builders have to agree to no profits and financial institutions whether banks or NBFCs have to take a haircut in order to save their NPAs. And for this, RBI’s instructions may be required as no bank would voluntarily agree, he said.
Home buyers welcome the move. “Prima facie, this appears to be an excellent move and will also set a very good precedent. But it is also very important to know (a) how the project will be funded and (b) if the builder has taken more money than what work has been done by him and how RERA plans to recover excess money from him,” says Abhay Upadhyay, President, Forum For People's Collective Efforts.Vandana.firstname.lastname@example.org