Homebuyers in apartment complexes that were stalled on account of unusual circumstances such as the pandemic are set to benefit from a proposal to give builders financial relief to enable them to complete the projects.
The panel proposed a moratorium on payments that builders owe land-owning authorities in such cases. This would enable the developers to improve their finances and complete the housing projects, people familiar with the matter said.
The builders will be allowed to clear their dues in stages. Upon completion of payments, buyers will be able to get their homes registered.
The proposal by the committee headed by Amitabh Kant, former CEO of Niti Aayog, is expected to provide relief to more than 2.5 million homebuyers in the country who are waiting to take possession of their apartments or get them registered. The panel is said to have submitted its report to the ministry of housing and urban affairs.
The focus was on providing relief to over 400,000 units and more than 2.5 million homebuyers invested in the stalled real estate projects, the people said.
The committee divided projects into three buckets – where work has not started, projects that were stalled after construction started, and those where builders handed over possession without registering the properties.
Some of the projects have become commercially non-viable on account of the high interest and accumulated amounts owed to the authorities. According to the panel, it is important that a reasonable interest rate be charged and the focus is on completing the projects.
In cases where the Supreme Court has issued an order, the committee proposed that the order be implemented and repetitive judicial review is not required.
The panel was of the view that the Insolvency and Bankruptcy Code should be amended so that only stalled projects should be taken up for resolution and not the builder company. This would ensure that the developer’s other projects are not adversely affected, the people said.
It proposed that the insolvency process should not impact homebuyers and that they should continue to receive possession of their units, they said.
The committee said state real estate regulators should be tasked with finding a solution to stalled projects and focus on getting them completed.
For real estate projects in Noida, the panel suggested a four-year moratorium – two years on account of stoppage of work due to a ban on activity around the Okhla Bird Sanctuary and two years for COVID-related disruption. It proposed that the land-owning agencies provide relief to the builders on dues/payments that are to be made by them.
The ministry of housing and urban affairs set up the committee headed by Kant in March to look into issues related to completing stalled housing projects.
The 14-member committee comprised top central and state government officials, including the Infrastructure and Industrial Development Commissioner and Chairperson, Noida; secretary in the Department of Financial Services; secretary in the ministry of corporate affairs; chairperson of the Insolvency and Bankruptcy Board of India; managing director of the National Housing Bank; chairperson of the UP Real Estate Regulatory Authority; and chief investment officer of SBI CAP Ventures.
