The Uttar Pradesh Cabinet on December 19 had approved the recommendations of Amitabh Kant committee on delayed real estate projects, bringing relief to lakhs of aggrieved homebuyers in Noida, Greater Noida and the Yamuna Expressway, who have been waiting to receive possession of their homes, some of which are stuck for more than a decade.
The state government had said in a statement that it has accepted some recommendations of the central committee headed by former Niti Aayog chairman Amitabh Kant, and will allow property registrations to take place if real estate companies clear 25% of their dues. There were significantly shaved of as the government’s penal interest applied between April 2020 and March 2023.
The decision is likely to benefit a large section of homebuyers in Noida, Greater Noida and Yamuna Expressway areas, where estimates put the number of stalled and unfinished housing projects between 240,000 and 350,000.
Here are five things homebuyers need to know about the recent policy that was announced by the Uttar Pradesh government.
The scheme is meant only for stalled housing projects
The policy will cater only to stalled housing projects, where home buyers are either unable to get possession or have not got their properties registered on account of the real estate developers’ failure to pay financial dues that they owe to the Authorities.
This policy will not cover stalled commercial projects, housing projects being developed or already under development under the group housing scheme and Sports City in Noida and Greater Noida markets.
The policy also excludes institutional, industrial projects and those that fall under recreational or entertainment category.
“The UP government policy is aimed at enabling home buyers to get the registry done or receive possession in stalled housing projects. The Sports City issues will be dealt with later,” said Manoj Kumar Singh, UP additional chief secretary and UP industrial development commissioner, who is also chairman for the Noida and the Greater Noida authorities.
UP government wants realtors to pass on waivers to home buyers
The central committee headed by Kant had also proposed that the penal interest be waived off for the April 2020 to March 2023 period due to the effects of the pandemic. This was one of the recommendations that has been accepted by the UP government. However, it will not apply to commercial, entertainment or recreational projects, including a group housing scheme named Sport City, UP finance and parliamentary affairs minister Suresh Kumar Khanna had said.
The penal interest and the penalties imposed during the period when the national green tribunal or any other court order had affected construction of a housing project will also be waived off.
“We have specified in the policy that the realtors must pass on the penal interest waiver benefit to the home buyers. The home buyers are entitled to get these waivers for the period under which the realtor has got the benefit. We will take along all stakeholders, including the home buyers, bankers and the realtors for successful implementation of this scheme,” said Manoj Kumar Singh, ACS UP government and chairman of the Noida and the Greater Noida.
The home buyers can approach the authority if the realtor does not pass on the waivers’ benefit.
Real estate developers need to clear financial dues within 60 days to obtain permission to register projects
The Uttar Pradesh government in its order has directed the Noida, Greater Noida and the Yamuna Expressway Industrial Development Authority to take up the policy to its respective board, make the defaulter realtors pay up their dues within 60 days and ensure that registration of flats is executed within three months. The government also said that an independent agency or a chartered accountant must be engaged to execute an audit and calculate the financial dues against a housing project as per the new scheme.
“We will study the government order and then do the needful,” said Lokesh M, chief executive officer of the Noida Authority.
A co-developer can take over a stalled project and deliver homes to buyers
The new scheme allows co-developers to take over the stalled project and complete it under the new scheme. If the developers do not opt for the scheme wherein they have to pay 25 percent of the total dues and the remaining in three years, the Authority can either cancel the allotment and take over the project or seize the commercial part of the project to recover dues so that registration of projects can begin.
“Under the co-developer option, if a developer fails to arrange the required funds to revive the project, he can bring in a co-developer, who can infuse the funds and complete the homes under the new policy,” said Manoj Kumar Singh.
Registries not de-linked with financial dues in a stalled housing project
To protect the interest of the homebuyers, the Kant committee had recommended for immediate possession and registration of stuck properties. It had also recommended that penal interests during the zero period (April 2020- March 2023) announced during Covid pandemic should be waived off. Another key proposal by the committee was to de-link registration of delayed projects with financial dues.
However, the UP government has not accepted this recommendation in order to recover its dues from the defaulting realtors. Developers who have defaulted have to pay up 25 percent of the total dues to obtain permission to register properties. Subsequently, the developer will be granted permission to register only 25 percent of the housing units that are ready. If he fails to pay the remaining 75%, permission granted for registering the housing units will be revoked.