The Uttar Pradesh government 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 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 Rs 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 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.
