The Noida Authority is planning to change its land allocation policy for group housing societies, making it mandatory for developers to pay the entire lease amount upfront to it. Until now, developers were making payments in instalments.
Developers in the city that has seen a ballooning trend of unfinished projects and mounting dues owed by builders will not be allotted the land until they pay 100% of the amount to the authority, officials said.
The proposal is likely to be presented at the next board meeting of the authority. The date is yet to be finalized. Under the existing policy, developers had to pay just a 40% amount for the land leased initially and the rest in instalments over the years.
Once the resolution is approved by the board and implemented, builders will not be able to leave the projects incomplete midway or divert funds since they would have already invested a sizeable amount as part of the authority's dues
The decision will help homebuyers get possession of their flats in time. "They don't need to struggle to get the registry done," an official said on the condition of anonymity. For the city, the move will reduce the burden of cases arising out of projects mired in insolvency proceedings, the official added.
"The authority has already made changes in the land allotment policy for industrial and residential plots. It is now thinking of modifying its policy for group housing category also and a proposal will be discussed in the next board meeting to allot land after taking the total amount rather than in instalments," said Noida Authority CEO Ritu Maheshwari.
The CEO was referring to the changes made by the authority this year. Builders who have been allocated industrial plots will also have to make the complete payment at the time of allotment. They had to pay the amount in instalments earlier. For residential plots, builders now have a year to deposit the complete payment instead of the three years before.
The authority was considering passing a resolution to take the full amount for land lease from developers. The shift in stand was prompted after the Supreme Court ruled last week that the Authority will be given an operational creditor status, instead of the financial creditor, taking away some of its powers in the resolution process after insolvency. At present, developers of housing societies owe Rs 20,000 crore in dues to the authority. More than 50,000 homebuyers are yet to get their flats registered.
A report by the Comptroller and Auditor General of India (CAG) last year had highlighted lacuna in the city's policy, pointing out how builders had taken advantage of the relaxed conditions for acquiring land. From 2005 to 2018, Noida allotted 24 schemes for land spanning across 71.03 lakh sqm to developers for group housing projects. Dues for these schemes amount to Rs 20,000 crore now.
During the same period, 1.3 lakh flats were sanctioned but only 72,697 units were completed till March 2020.A majority of allotments were also given till 2010-11. Despite a decade having gone by, 57,308 flats are yet to be completed. Until 2006, the authority used to demand an initial payment of 40% for the land leased. This was reduced to 20% from 2008 and further up to 10% from 2009. In 2017, Noida again went back to the 40% payment but most of the land for housing projects had been allotted earlier, the CAG said.
