'It helps none': Developers write to govt against Noida's reschedulement policy

NOIDA: One of the two main associations of real estate companies, Naredco, wrote to the chief secretary on Tuesday, urging a rollback of the Noida Authority's reschedulement policy, arguing it has no benefit for developers and no parity with allotment rates that are now in force.
The reschedulement policy, which aims to coax developers into clearing legacy dues that have run into thousands of crores and become the real estate sector's bugbear, affecting delivery timelines and holding up registries, was approved by the boards of the Noida and Greater Noida authorities last month.

The policy allows a developer to reschedule the payment cycle over a two-year period but is applicable only on the total outstanding, which includes all the penalty and interest components, on a 20% upfront payment.
In its letter, Naredco said that the terms and conditions of the reschedulement policy were rigid, and the stance taken by the two authorities would affect developers, banks and homebuyers alike.
"The authorities have simply capitalised the current outstanding, including land premium, interest, penal interest and farmer compensation, and rescheduled it for payment of 20% initially and balance 80% in four half-yearly instalments. A waiver or reduction of interest and penal interest on land premium has not been considered," wrote RK Arora, the UP president of Naredco and owner of Supertech.
Naredco claimed that after adding all dues, the rate a developer would have to pay under the new policy far exceeds the current allotment rate.
"For instance, in Sector 94 Noida, the cost of land for an allottee comes to Rs 3.48 lakh per sqm (square metre), whereas at the same location, fresh allotment has been made by Noida Authority at Rs 1.6 lakh per sqm," the letter stated.
The letter comes days before a joint petition by Naredco and Credai in the Supreme Court for a review of its order last year recalling the 8% cap on interest rates comes up for hearing on Thursday. Between the two authorities, the total dues are estimated at Rs 39,500 crore. This includes premium, interest and penal interest.
Realtors have been pushing for a one-time settlement policy with dues calculated at simple interest. Noida's argument has been that the dues accrued because of developers defaulting on payments and penalties and interests were levied in line with agreements signed at the time of allotment.