States told to extend deadlines of real estate projects

Offering some reduction to actual property builders, Union finance minister Nirmala Sitharaman on Wednesday requested states and union territories to increase the registration and completion date by six months of all initiatives registered underneath the Real Estate Regulatory Authority (RERA). This would apply to all actual property venture registrations expiring on or after 25 March and particular person functions aren’t wanted.

Sitharaman mentioned the Covid-19 pandemic ought to be thought-about an occasion of ‘force majeure’ or an ‘act of God’ underneath RERA. Consequently, the city growth ministry will problem an advisory to all states and UTs so the respective regulatory authorities can invoke the ‘force majeure’ clause.

“The decision to treat Covid-19 as an event of ‘force majeure’ under Section 6 of the RERA and extension of registration and completion date are proactive steps from the central government,” Abhilash Pillai, companion, Cyril Amarchand Mangaldas, mentioned. “This will certainly help developers, especially in a situation when they are facing supply-chain disruption and shortage of labour. The developers will also be able to pass on the benefit to the home buyers, by extending the payment schedule, who are facing pay cut/ job less threats on account of Covid-19.”

The finance minister mentioned that recent venture registration certificates ought to be issued mechanically with revised timelines. Timelines shall be prolonged for varied statutory compliances underneath the RERA concurrently.

The Covid-19 has stalled the development of 1000’s of actual property initiatives, placing a cease on dwelling gross sales and creating money circulate issues for builders.

The residential sector was already reeling from a protracted slowdown and the lockdown has solely deepened the disaster.

“…This is a big move that will de-stress developers significantly, since construction activity had been halted all across the country. Home buyers’ wait for their homes will get extended by this move, but this was in any case inevitable,” mentioned Anuj Puri, chairman, Anarock Property Consultants.

However, builders and traders mentioned that liquidity infusion is required to show across the sector, which has been witnessing a slew of challenges.

Sharad Mittal, chief government of Motilal Oswal Real Estate Fund, mentioned with most initiatives prone to be delayed by at the very least four to six months, this can be a welcome transfer, however it doesn’t deal with the bigger liquidity and money circulate associated challenges confronted by builders.

The extension of deadline might also imply further curiosity burden for dwelling consumers as they should proceed servicing their dwelling loans for this prolonged interval.

“The government has basically legitimised the delay even if the delay may not have been necessary on the account of Covid-19. There is no clarity whether homebuyers will be able to correspondingly delay their payments to developers. The home buyers will have to continue paying EMIs and rent during this period,” mentioned Gaurav Gupta, CEO, MyLoanCare.in.

“Force majeure was not required. The extension of deadlines should have been limited to the lockdown period,” mentioned Abhay Upadhyay, president, homebuyers physique Forum for Peoples’ Collective.