The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has recommended the state government to delink penalties against developers in Noida and Greater Noida over unpaid dues and permit registration of more than 45,000 housing units that are complete.
As per Noida and Greater Noida Authorities estimates, developers owe close to Rs 39,000 crore to them in dues, and the authorities have not issued occupancy certificates for completed projects unless developers clear their dues.
“We have made recommendations under Section 32 of the RERA Act to the state government and suggested the delinking of the registry from the no-dues certificate because real estate developers are facing a financial crunch. This can help resolve the issues for 165,000 homebuyers who have been waiting for so long. We have also suggested that the authorities can mortgage the personal assets and properties of the developers as a guarantee, so that the deadlock can be resolved and buyers get their homes,” Rajive Kumar, chairman, UP-RERA, told Moneycontrol.
Under Section 32, the real estate regulator has powers to make recommendations to the government in order to facilitate the growth and promotion of a healthy, transparent, efficient and competitive real estate sector, as well as protect the interests of allottees, promoters and real estate agents.
“What we have recommended is a one-time effort and our endeavour is to ensure that 45,000 buyers whose homes are complete should get their homes registered. The real estate market is looking up and it is the right time to revive the real estate sector as the impact of such measures would be the maximum. A revival plan will boost the confidence of the promoters, bring relief to the homebuyers of stuck projects and attract more buyers,” Kumar said.
Homebuyers should not suffer on account of recovery of dues, he said, adding, “These recommendations, if implemented, can help resolve more than 70 percent of cases.”
The survey
The UP-RERA had commissioned a survey on the issue in February this year. The consultant studied close to 200 affected projects in the Gautam Budh Nagar district and concluded that a uniform, one-size-fits-all policy cannot address the issue at hand. It recommended that there should be a policy that can address the issues on a ‘case-to-case’ basis because the problems were different in every project. The survey found that there are as many as 45,000 units in which buyers have possession without a registry and 125,000 units where neither possession nor registry has happened. These units are in the advanced stages of completion.
“We have recommended a slew of options to the state government. We have suggested that the Noida and Greater Noida authorities cancel land allotments and resell stalled projects with no possibility of revival. The authorities could also auction the builders’ properties. The authorities can allow builders to surrender land or take control of surplus lands for sale to recover dues. Some projects may have unsold inventory. The aim should be that the title of the flat is transferred from the builder to the buyers,” Kumar said.
In the case of stalled but viable projects, the survey recommended that the authorities introduce a co-developer policy, wherein a second developer would take over a project, complete it and clear the dues. Incentives, such as an interest rate rebate, can be provided to such a co-developer.
“When we got this study done, we found that six out of eight projects were viable but they had liquidity issues. We have suggested things such as recognising a co-developer and also if surplus land can be surrendered,” he said.
Some projects, Kumar said, can be completed if the authorities provide them support in terms of zero periods for the time lost in completing the construction due to reasons like the COVID-19 pandemic and NGT orders banning construction.
Other solutions
The survey also proposed a reverse corporate insolvency resolution process (CIRP) for projects undergoing insolvency proceedings in the National Company Law Tribunal (NCLT), where a promoter is given the opportunity to revive the company and act as a lender or financial creditor. “In various cases, we have seen that the NCLT has restricted the dues of authorities up to 30 percent, hence giving them the opportunity could be a good decision,” said Kumar.
The UP-RERA has also said that harsh decisions should not be taken on projects that are being completed with the SWAMIH (Special Window for Affordable and Mid-Income Housing) funds.
The state government, the RERA chairman said, is also looking for ways to address the real estate problems and is drawing up a package on these issues. At the national level, the Union Ministry of Housing and Urban Affairs has set up a committee, led by former NITI Aayog CEO Amitabh Kant, to resolve the stalemate over stalled housing projects across the country.
“The state government is already working on a package to revive these projects. Our recommendations would feed into theirs and they can take a call on what the final policy should be. The Kant Committee would keep in mind the pan-India position on this. The Kant Committee’s decisions will be additional inputs for the state government. It may feed in two ways. It depends on whether the state government finalises its recommendations earlier or the Kant Committee,” Kumar added.