The developers also demanded that steps should be taken to boost liquidity in the sector, especially after the NBFC crisis.
Real estate body Naredco has said that the realty sector is undergoing a 'crisis situation' and demanded that the government should intervene by infusing Rs 2000 crore in a stressed asset fund to kickstart construction in stuck housing projects.
"We cannot leave 2.5 lakh stalled units to normal processes of law, that is not the complete answer. We do need the intervention of the government to infuse funding, take over the project and complete it. The stressed fund should be the size of Rs 2,000 crore to kickstart construction in stalled projects," Naredco president Niranjan Hiranandani told reporters while discussing the pre-Budget proposals submitted to the Finance Ministry.
Stressed assets have been a cause of concern for developers as well as homebuyers, who are struggling to get possession of their booked properties. This can become an opportunity if government and lending institutions come forward and arrange required fund to complete the stalled projects. NAREDCO calls upon government, banking institutions and other lenders to infuse liquidity and revive stalled projects, he said.
The stressed fund of Rs 2000 crore will be the maximum amount required to put back 2.5 lakh apartments. This will be funding only for an intermediate period to help complete stalled projects of developers having negative net worth. Additional funds would come from sale of unsold units, customers collections and monetisation of surplus land with the developers concerned.
"The fund infused initially by the government can be easily recovered," Hiranandani said.
He told reporters that discussions with NITI Aayog on the issue a year ago were very positive.
The developers also demanded that steps should be taken to boost liquidity in the sector, especially after the NBFC crisis.
"The real estate sector is passing through a difficult phase because of some harsh, though progressive, regulatory and financial reforms undertaken by the government in the last two years, such as demonetization, RERA, GST and Insolvency and Bankruptcy code. A number of measures, to improve liquidity and rationalisation of GST for under-construction properties, suggested by Naredco in its pre-budget memorandum, will help address the concerns of the industry to a large extent," he said.
In its pre-Budget memorandum, Naredco has demanded that the GST should be brought down to 5 per cent with input tax credit (ITC) for affordable housing from 8 per cent, while for other projects the rate should be 8 per cent with ITC from the present 12 per cent.
"After the implementation of realty law RERA, the amount of fund required to develop a project has gone up three times as 70 per cent of the money collected from sales needs to parked in an escrow account. NBFCs were funding the sector in a big way to meet this increased fund requirement," Hiranandani said.
Hiranandani said the lower GST rate would not affect tax collection. "Customers are postponing their buying decision as completed units do not attract GST if the project has completion or occupancy certificate".
The association's Vice-President Parveen Jain spoke about the need to promote rental housing as it is being done to help people in owning a house through different schemes.
vandana.ramnani@nw18.com
