by THO
The Uttar Pradesh government on Tuesday waived off penalties and slashed the interest applied on dues by real estate developers, paving the way for potentially hundreds of thousands of homebuyers to be able to register properties in their name.
In a statement, the government said that it had accepted some recommendations of 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, which in itself was shaved off significantly as the government removed the penal interest applied between April 2020 and March 2023.
The decision will likely help 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.
While a large part of these stuck units are simply unfinished, many of these are where the builder has completed projects but has not settled land dues to the regional authority. It is only when these dues are cleared that the authorities hand out what are known as completion and occupancy certificates, which are required for a homebuyer to be able to register a property.
If only cases where people have received possession of their properties but have not been able to register them in their names are considered, Tuesday’s decision will benefit 165,000 homebuyers if their real estate companies pay up the 25% due.
The three authorities in Gautam Budh Nagar district are struggling to recover at least ₹70,000 crore in the form of land cost dues from around 400 realty projects. In most cases, the promoters have cited financial crisis for being unable to complete the projects or settling the dues.
The decision will also help bring stalled projects back on track, an official said.
“The UP government has waived off the penal interest, a demand raised by the real estate sector for a long time. Now the developers defaulting on payments can pay 25% of the total defaulted amount and get permission for registry, mortgage and map approval, etc. so that stalled housing projects can be revived and delivered to the homebuyers,” said Manoj Kumar Singh, additional chief secretary and UP infrastructure and industrial development commissioner, who also holds the charge of chairman of the Noida and the Greater Noida authority.
“With this scheme all stalled projects will see a solution and homebuyers will get justice. It is a major decision taken in the interest of the homebuyers and other stakeholders of the sector,” added Singh.
The central committee led by Kant had on August 21 proposed that penal interest be waived off for the April 2020- March 2023 period due to the effects of the pandemic. This was one of the recommendations that was accepted, although 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 said.
The Kant panel report had also suggested that homebuyers be allowed to register properties even if a realtor does not clear dues, although this was not accepted by the state.
The problem of pending dues traces back to how the three authorities allotted land — developers were allowed to take possession and begin construction after paying 10% of the plot’s cost, with the remainder allowed to be paid in instalments at a simple interest rate.
With the dues unpaid, the authorities also slapped a penal interest on top, raising the interest rates in some cases to as high as 25% per annum. The authorities has now decided that in addition to the three-year waiver, it will also calculate dues at an 8.5% interest rate, a move that will significantly shave off the amount owed.
The Noida and the Greater Noida authority said they expect to witness a 30% loss in revenue with the new scheme.
Homebuyers were cautious in their reaction to the decision. “We hope that the new scheme details will be shared without any delay and then it will implemented too to benefit homebuyers,” said Abhishek Kumar, president of Noida Extension flat owners’ association.
Rajiva Singh, president of Noida federation of apartment owners’ association, said, “It’s a welcome step because the apartment owners have suffered a lot in the past several years due to non-registration of flats. Even in old societies, thousands of flats are without registry due to default by realtors. We hope this new scheme will fix the issues now.”
To be sure, there are 15 realty projects in Noida and 16 in Greater Noida that are in bankruptcy proceedings – these will not be covered.
Some major projects, such as those of the Amrapali, Unitech and Ansal groups, too, will not be covered since they are in litigation at various courts.
Realtors and analysts largely welcomed the decision.
“The Uttar Pradesh government has taken a big decision to address the issues being faced by the real estate sector and it will immensely benefit not only the apartment buyers but also the entire realty sector as a whole. This scheme will revive the stalled realty projects, enable buyers to execute registry and shift into their ready units. It will create a huge positive impact on the real estate sector in Noida, Greater Noida and Yamuna Expressway among other cities in the state. We thank the UP government and hope for a quick revival of the realty sector,” said Ajay Chaudhary, chairman and managing director Ace Group and member of confederation of real estate developers association of India (CREDAI), a realtors lobby group.
Santosh Kumar, vice chairman of Anarock Group, said: “The UP cabinet’s approval of the recommendations of the Amitabh Kant committee on stalled projects will bring much relief for aggrieved buyers. Notably, Noida and Greater Noida in UP had the maximum concentration of stalled and delayed residentials projects in the country. Both these areas account for more than 35% of the total delayed units across top seven cities.”
