How government, banks came together to solve India's biggest real estate mess

The Uttar Pradesh government on Wednesday brought relief to lakhs of homebuyers. The cabinet did so by approving the implementation of recommendations from the Amitabh Kant Committee report on real estate projects. The approval came the Industrial Development Department proposed resolving stalled housing projects, UP cabinet minister Suresh Kumar Khanna said during a press briefing in Lucknow. “The cabinet has approved the implementation of the recommendations of a central committee headed by ex-CEO of NITI Aayog Amitabh Kant,” said Khanna, the state’s Minister for Finance and Parliamentary Affairs. But what does the report state? What are its recommendations? What do experts think? Let’s take a closer look: What does the report state? In March, the Union Housing and Urban Affairs Ministry had set up a 14-member committee headed by former NITI Aayog CEO Amitabh Kant to examine issues related to stalled real estate projects. It asked the committee to recommend how these projects could be completed. The panel presented the committee’s report to Union Housing and Urban Affairs Minister Hardeep Singh Puri on 21 August. In its report, the committee said it has examined the status of the pending registration/sublease deeds. The prevalent delay in the execution of registration/subleases, despite project completion, is largely attributable to instances of builders defaulting on their dues to the relevant authorities, the report pointed out. This has adversely affected genuine homebuyers, who have fulfilled their obligations but are yet to receive their legitimate rights, the panel said. What are its recommendations? The approved recommendations include providing immediate registry and sub-lease deed rights to homebuyers and benefits of ‘zero period’ to developers in terms of penalties for delay during COVID-19 from April 1, 2020 to March 31, 2022. [caption id=“attachment_13525742” align=“alignnone” width=“640”] The move, which will benefit 2.4 lakh homebuyers, has been hailed by experts News18[/caption] “For this, two main points were considered that buyers’ interest was taken into account. Those who have bought homes should get its possession and registry immediately," he said. Along with this, the Cabinet has approved implementation for ‘zero period’ relief to real estate projects as mentioned in the recommendations of the report, he said.

Zero period means that no interest should be charged for that period from real estate projects.

However, these approvals do not apply to commercial, sports or entertainment projects but to all others, the minister added. Khanna said the second point was that in the circumstances arising out of COVID-19, the benefit of ‘zero period’ should be given from 1 April, 2020, to 31 March, 2022. “In light of these findings, the committee strongly recommends immediate registration/execution of subleases in favour of these rightful home buyers. This should not be contingent on the recovery of dues from the builders. This would benefit approximately about one lakh home buyers,” the panel report said. As per The Times of India, this would mean that nearly four years of interest and penalties would be wiped clean. The committee also recommended allowing co-developers to be brought in to ensure projects are finished. This can be done for full projects or parts of a project. No permission will be required from authorities in Noida and Greater Noida. The committee had also endorsed a package for projects facing financial shortfall. The committee said the package would look to make the projects financially viable and developers would have three years to complete such undertakings. As per India Today, the committee had also suggested a 30 to 40 per cent rebate for builders – allowing them to clear their dues and allowing flat registry to begin. As per The Statesman, the cabinet has approved issuing municipal bonds for the corporations of Kanpur, Prayagraj, Varanasi and Agra. It has also established funds for credit rating investment from the Establishment Development Fund. How will it help? Khanna, citing an estimate by the Indian Banks Association, said there are about 4.12 lakh homes across the country which could not be completed due to the poor financial status of the developers.

“Of these stalled homes, around 2.40 lakh are in the national capital region, including Noida and Greater Noida,” Khanna said.

“Some industry estimates have pegged the number of stalled homes in Noida and Greater Noida to around 1.50 lakh, with citizens’ groups and homebuyers’ associations in the twin cities frequently holding protests demanding implementation of the recommendations of the Amitabh Kant Committee report. Khanna said if the committee’s recommendations are implemented, the interests of homebuyers will be protected and fully constructed houses will be available to homebuyers on time in stalled projects. “This will give a boost to the economic development of the area and the Centre’s committee has been formed especially for those people who had incomplete houses in Noida, Greater Noida and NCR or those who did not get possession," he said. “The report of the committee has been approved today by our Council of Ministers in which the committee specifically recommended that the registration of sub-lease deeds of all the people who are residing as on date should be done immediately,” he said. What do experts think? Experts have hailed the move. Manoj Gaur, president, CREDAI NCR and CMD Gaurs Group, told Hindustan Times, “The step directly benefits as many as 2.40 lakh homebuyers in the National Capital Region (NCR). With the exemption of interest during the zero period, many flat owners can now proceed with the registration of their homes without additional financial burden. “The decision to include real estate projects in the zero period, exempting them from interest charges, is a positive development benefiting various stakeholders in the NCR real estate sector. All stakeholders, including financial institutions, authorities, state exchequers, and developers, stands to gain with the move,” Amit Modi, director, County Group, told The Times of India. “Approving and adopting the recommendations made by the expert committee would help thousands of homebuyers achieve their dream of owning a home. This will rekindle confidence among homebuyers, encouraging renewed investment in the sector. It will also signify a proactive approach to reigniting progress and bolstering the region’s development landscape,” added Piyush Bothra, Co-Founder and CFO, Square Yards. Rajiva Singh, president of Noida Federation of Apartment Owners Association (NOFAA), said, “We anticipate an end to the long wait for a majority of homebuyers. We appreciate the commitment shown by governing bodies and public representatives” With inputs from agencies