Unless there is an option of EMIs being deferred and without any added interest obligation, the moratorium does little to help the homebuyers.

The apprehensions caused by Covid-19 are multiplying by the day and are keeping the government, stakeholders and consumers across industries on their toes. The latest advisory about project completion deadlines being extended by six to nine months brings another debatable solution to the fore.

Here’s a quick background. The Forum for People’s Collective Efforts (FPCE), a forum of homebuyers, is pursuing Prime Minister Narendra Modi’s intervention in the extension of project completion by builders. The FPCE urges the extension to be restricted to only the actual lockdown period. Along with that it is also seeking an interest waiver on home loans. In a letter to the Prime Minister, the association has advocated that the government’s policy should focus on homebuyers for revival of this sector. The extension seems to be out and out in favour of the builders and leaves consumers in a state of despair. The forum believes that the blanket extension to all real estate projects across the country for at least six month with an additional three months at states’ discretion, over and above the one year already provided under section 6 of the realty law RERA, is unjustified. The 3 stakeholders (govt, builders & homebuyers) are stuck in a dilemma and everybody’s perspective seems logical here.

Although it is quite reasonable to argue that the extension in projects completion timeline should be limited to the actual period of lockdown, the industry is dealing with multiple issues that may not be resolved as quickly as India unlocks. As a majority of migrant labour has receded to their hometowns, builders are dealing with a shortage of workforce to deliver the projects on time. Labour might start coming back as the situation improves gradually, but it will be a while before construction activity resumes the same momentum as it did pre-lockdown.

Having said that, homebuyers have a lot to deal with if this goes as directed. It increases their financial burden as they will have 6-9 more months of EMIs and rentals to pay. Given the job uncertainty and pay cuts that many homebuyers are facing today, the current advisory seems a little insensitive towards them and leans in the favour of builders. If real estate were to be revived, homebuyers’ concerns cannot be taken lightly and must be given due importance. Even though the government has given a moratorium on EMI payments, it comes stocked with interest liabilities.

The letter categorically states that the proposed extension is illegal and beyond the powers under the law, and that the one year already provided under section 6 should be exhausted first.

The situation looks difficult for all the stakeholders, but the current advisory from the Centre means that over lakhs of homebuyers are facing maximum brunt of the “Force Majeure”.

It is difficult for the government to work out a solution that best suits the interest of all stakeholders and therefore, although it has announced scattered reforms here and there, a holistic solution is still awaited. It will be hard to arrive at a mutual consent point unless each stakeholder is willing to let go a little and bear some heat.

Unless there is an option of EMIs being deferred and without any added interest obligation, the moratorium does little to help the homebuyers. Either that or recovery of EMIs should be made from builders till the time of blanket extension. The lobbying bodies should remember that RERA which was conceptualised in the interest of homebuyers and to rescue them from multiple disabling factors in the industry should not be used as a cloak to conceal its hideous aspects. The industry is dependent on homebuyers’ faith in it. Policies brought into force with the impression that they might cause short-term commotion can cause a long-term loss of faith.

(By Saurabh Garg, Co-founder & CBO, NoBroker.com)