UP considers zero period policy to aid stalled real estate projects
Real Estate

UP considers zero period policy to aid stalled real estate projects

In a significant development aimed at addressing the concerns of homebuyers stuck in stalled real estate projects, the Uttar Pradesh government is actively considering a rehabilitation package. This initiative stems from the recommendations made earlier this year by an expert committee led by bureaucrat Amitabh Kant.

During a specially convened meeting in Lucknow on September 28, dedicated to discussing the expert panel's suggestions, several crucial decisions were deliberated. Chaired by the chief secretary, the meeting reached a consensus on granting a four-year 'zero period' to developers. This period, as proposed, involves waiving interest payments on land dues and penalties for defaults. Developers will not be permitted to pass on penalties, extra costs, or interest to buyers during this time. Furthermore, the meeting suggested allowing the original allottees to collaborate with co-developers to complete financially viable projects, aiming to revitalise the real estate sector in the state.

However, a lack of consensus emerged among officials present, including CEOs of Noida, Greater Noida, and Yamuna Expressway authorities, as well as the state industrial development commissioner, concerning the delinking of registries from builders' payment of land dues. Some officials expressed concerns that such a move might lead to a loss of control over the dues repayment process.

To bridge funding gaps for stalled projects, the committee chaired by Amitabh Kant proposed granting additional Floor Area Ratio (FAR) to projects in exchange for additional charges paid to the government. Revenue generated from the extra built-up area would be utilised to support these projects. The rehabilitation package might also include incentives, such as increasing commercial space within projects.

All three authorities involved recommended providing builders with an additional three years to complete projects without imposing time-extension charges. Homebuyers have been particularly concerned about the delayed registration of flats in various projects across Noida due to disputes between developers and the government over pending dues. The authorities are considering amendments to existing policies, potentially allowing partial cancellation of lease deeds for incomplete portions of projects and introducing a policy for partial surrender of plots to reduce dues burdens.

According to estimates, builders collectively owe more than Rs 470 billion to the development authorities in the district. If the proposed concessions under the zero period policy are implemented, Noida Authority might have to forgo around Rs 74 billion, Greater Noida approximately Rs 60 billion, and the Yamuna Expressway Authority around Rs 10 billion.

In a significant development aimed at addressing the concerns of homebuyers stuck in stalled real estate projects, the Uttar Pradesh government is actively considering a rehabilitation package. This initiative stems from the recommendations made earlier this year by an expert committee led by bureaucrat Amitabh Kant. During a specially convened meeting in Lucknow on September 28, dedicated to discussing the expert panel's suggestions, several crucial decisions were deliberated. Chaired by the chief secretary, the meeting reached a consensus on granting a four-year 'zero period' to developers. This period, as proposed, involves waiving interest payments on land dues and penalties for defaults. Developers will not be permitted to pass on penalties, extra costs, or interest to buyers during this time. Furthermore, the meeting suggested allowing the original allottees to collaborate with co-developers to complete financially viable projects, aiming to revitalise the real estate sector in the state. However, a lack of consensus emerged among officials present, including CEOs of Noida, Greater Noida, and Yamuna Expressway authorities, as well as the state industrial development commissioner, concerning the delinking of registries from builders' payment of land dues. Some officials expressed concerns that such a move might lead to a loss of control over the dues repayment process. To bridge funding gaps for stalled projects, the committee chaired by Amitabh Kant proposed granting additional Floor Area Ratio (FAR) to projects in exchange for additional charges paid to the government. Revenue generated from the extra built-up area would be utilised to support these projects. The rehabilitation package might also include incentives, such as increasing commercial space within projects. All three authorities involved recommended providing builders with an additional three years to complete projects without imposing time-extension charges. Homebuyers have been particularly concerned about the delayed registration of flats in various projects across Noida due to disputes between developers and the government over pending dues. The authorities are considering amendments to existing policies, potentially allowing partial cancellation of lease deeds for incomplete portions of projects and introducing a policy for partial surrender of plots to reduce dues burdens. According to estimates, builders collectively owe more than Rs 470 billion to the development authorities in the district. If the proposed concessions under the zero period policy are implemented, Noida Authority might have to forgo around Rs 74 billion, Greater Noida approximately Rs 60 billion, and the Yamuna Expressway Authority around Rs 10 billion.

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