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UP to unveil relief package for stalled real estate projects
Real Estate

UP to unveil relief package for stalled real estate projects

The Uttar Pradesh government is poised to unveil a rehabilitation package for stalled real estate projects, potentially as early as next week. This package is expected to mirror recommendations made by a panel of experts led by Amitabh Kant, former CEO of Niti Aayog.

The proposed package is keenly anticipated by both builders and homebuyers. It is likely to include a rescheduling scheme that permits builders to settle outstanding dues to the state in installments, easing financial burdens.

Additionally, the package is anticipated to encompass a co-developer policy, facilitating the completion of stagnant construction projects. This policy aims to bring in additional expertise and resources to expedite the completion of these projects.

Furthermore, the package is expected to extend the 'zero period,' during which interest and penalties are waived for projects adversely impacted by the pandemic and construction bans. This measure aims to alleviate the financial strain on builders and project completion timelines.

The package closely aligns with the Kant panel's recommendations and is projected to benefit approximately 2 lakh homebuyers in Noida who have faced extensive delays in flat deliveries or are unable to register their flats due to disputes between builders and the Noida Authority regarding due calculations. Collectively, developers owe the three development authorities in Gautam Budh Nagar in excess of Rs 50,000 crore.

In the coming days, a decision will be made regarding whether to delink flat registry from land dues payment by builders. Currently, flat-wise registration is permitted through partial occupancy certificates once proportionate dues are cleared by the builder. However, this approach has yielded limited results.

During a meeting held last month in Lucknow, the three industrial authorities in Gautam Budh Nagar expressed concerns about delinking dues and registries, citing potential loss of control over the repayment process.

A senior official stated that a detailed report outlining the state government's package has been prepared, incorporating feedback and suggestions from the law and finance departments.

"A formal announcement will be made next week. Preparations are underway to implement the Amitabh Kant committee's recommendations to the fullest extent possible. A comprehensive plan has been devised following high-level discussions. Significant relief is likely for flat buyers who have been awaiting registration for years," the official remarked.

In March, the central government formed a 14-member committee to propose solutions for completing stalled projects. The committee submitted its report in July. In addition to allowing zero period benefits, co-developers for stuck projects, and installment-based payment of dues, the committee also sought to address funding gaps by proposing to grant increased floor area ratio (FAR) upon payment of additional charges to the government.

The committee suggested that the zero period in Noida could apply to two phases: from April 1, 2020, to March 31, 2022, due to COVID-related disruptions, and from August 14, 2013, to August 19, 2013, when the National Green Tribunal halted construction until an eco-sensitive zone for the Olkhla Bird Sanctuary was demarcated.

Another recommendation is that developer dues should be calculated at the SBI MCLR rate from June 2020. Builders who wish to relinquish projects may be permitted to do so. However, only builders who deposit 25% of the dues upfront and commit to repaying the remaining sum over a period of three years will be eligible for the benefits, as per the committee's recommendations.

The Uttar Pradesh government is poised to unveil a rehabilitation package for stalled real estate projects, potentially as early as next week. This package is expected to mirror recommendations made by a panel of experts led by Amitabh Kant, former CEO of Niti Aayog. The proposed package is keenly anticipated by both builders and homebuyers. It is likely to include a rescheduling scheme that permits builders to settle outstanding dues to the state in installments, easing financial burdens. Additionally, the package is anticipated to encompass a co-developer policy, facilitating the completion of stagnant construction projects. This policy aims to bring in additional expertise and resources to expedite the completion of these projects. Furthermore, the package is expected to extend the 'zero period,' during which interest and penalties are waived for projects adversely impacted by the pandemic and construction bans. This measure aims to alleviate the financial strain on builders and project completion timelines. The package closely aligns with the Kant panel's recommendations and is projected to benefit approximately 2 lakh homebuyers in Noida who have faced extensive delays in flat deliveries or are unable to register their flats due to disputes between builders and the Noida Authority regarding due calculations. Collectively, developers owe the three development authorities in Gautam Budh Nagar in excess of Rs 50,000 crore. In the coming days, a decision will be made regarding whether to delink flat registry from land dues payment by builders. Currently, flat-wise registration is permitted through partial occupancy certificates once proportionate dues are cleared by the builder. However, this approach has yielded limited results. During a meeting held last month in Lucknow, the three industrial authorities in Gautam Budh Nagar expressed concerns about delinking dues and registries, citing potential loss of control over the repayment process. A senior official stated that a detailed report outlining the state government's package has been prepared, incorporating feedback and suggestions from the law and finance departments. A formal announcement will be made next week. Preparations are underway to implement the Amitabh Kant committee's recommendations to the fullest extent possible. A comprehensive plan has been devised following high-level discussions. Significant relief is likely for flat buyers who have been awaiting registration for years, the official remarked. In March, the central government formed a 14-member committee to propose solutions for completing stalled projects. The committee submitted its report in July. In addition to allowing zero period benefits, co-developers for stuck projects, and installment-based payment of dues, the committee also sought to address funding gaps by proposing to grant increased floor area ratio (FAR) upon payment of additional charges to the government. The committee suggested that the zero period in Noida could apply to two phases: from April 1, 2020, to March 31, 2022, due to COVID-related disruptions, and from August 14, 2013, to August 19, 2013, when the National Green Tribunal halted construction until an eco-sensitive zone for the Olkhla Bird Sanctuary was demarcated. Another recommendation is that developer dues should be calculated at the SBI MCLR rate from June 2020. Builders who wish to relinquish projects may be permitted to do so. However, only builders who deposit 25% of the dues upfront and commit to repaying the remaining sum over a period of three years will be eligible for the benefits, as per the committee's recommendations.

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