UP govt may announce rehabilitation package for stuck real estate projects next week

For representational purpose

The Uttar Pradesh government is likely to announce a rehabilitation package comprising a slew of relaxations for developers, including reschedulement and zero-period policies to waive interest and penalties imposed for financial default, among others, sources said.

The move will help homebuyers, some of whose homes have been delayed for almost a decade, they added.

Based on recommendations of the Amitabh Kant Committee, the government may introduce a ‘zero period’ and co-developer policies to enable the completion of stalled projects, they said.

According to sources, these policy decisions are likely to be approved in the UP Cabinet meeting on November 28. After the Cabinet nod, the government is expected to make a formal announcement of the rehabilitation package.

They said that most of the work regarding deliberation on the Kant panel report and the observations submitted by three development authorities in Noida, Greater Noida and the Yamuna Expressway has been done and a final report is ready.

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“After numerous high-level meetings, the government has prepared a detailed plan to provide relief to homebuyers and also help developers in reviving their stuck housing projects. However, the government is still pondering over whether to delink the registry of flats from payment of land dues by builders. It may reach some decision on this point by the time it goes to the Cabinet for approval,” a source said.

Respite to homebuyers

According to estimates, around two lakh homebuyers have been waiting to get their units registered on account of dues pending on the part of builders. Currently, the Authorities have allowed flat-wise registration through partial occupancy certificates after clearance of proportionate dues by the builder.

Sources said that the government is likely to provide for a four-year zero period to developers in the package for projects disrupted during COVID-19 and those affected by the two-year National Green Tribunal (NGT) ban on projects located in a 10-km radius of the Okhla Bird Sanctuary.

The revenue loss

Sources said that if zero period is offered, the three development authorities may collectively have to forgo around Rs 14,400 crore. The Noida Authority may have to give up about Rs 7,400 crore while the Greater Noida Authority may have to forgo Rs 6,000 crore and the Yamuna Authority would lose Rs 1,000 crore.

These Authorities have already submitted reports to the state government on the financial implications of implementing measures such as ‘zero period’ and delinking of registries from builders’ dues.

Also Read: Stuck projects: Noida, Greater Noida authorities told to prepare report on financial implications, possible approaches to address issue

Real-estate developers collectively owe around Rs 46,000 crore to the development authorities in Gautam Budh Nagar. They owe almost Rs 26,000 crore to the Noida Authority and about Rs 14,000 crore to the Greater Noida Authority. The dues for the Yamuna Expressway Authority stand at Rs 4,700 crore.

The central government, in March 2023, had formed a 14-member panel headed by former CEO of NITI Aayog Amitabh Kant to address the issue of stuck housing projects.

To enable developers to improve their finances and complete delayed or stalled housing projects, the panel had proposed a moratorium on payments that builders owe land-owning authorities, with the provision that they clear their dues in stages.

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The committee said that a reasonable interest rate should be charged and the focus should be on completing projects. The Kant committee had also recommended allowing co-developers to revive and complete stuck housing projects.