NEW DELHI: A 14-member expert committee on stalled real estate, headed by Amitabh Kant, has recommended a slew of measures to revive them, including handover of flats on an “as is where is basis” in projects that are nearly ready with homebuyers exempted from paying the remaining dues to the builder.
Read More: First-time house buyers, here’s how to get your house in order
It has suggested financing windows that will include additional facilities for existing home loans by restructuring them and treating them as “standard assets”, while making funds available to developers at a low cost.
The main focus of the recommendations submitted to the ministry of housing and urban affairs is to make the project viable, for which it has recommended measures ranging from a moratorium or a zero period for disruptions caused by Covid-19 or events such as the ban on construction around the Okhla Bird Sanctuary. Several of these steps were reported first by TOI on Thursday.
The committee has suggested a reduction in interest (and linking it to SBI’s marginal cost of lending rate of June 1, 2020), allowing co-developers in the projects, permission to partially surrender land, monetisation of excess land and higher floor area ratio to make the projects viable. Once a builder opts for the “rehabilitation package”, it will have to pay 25% of the dues within 60 days and the remaining 75% over three years at simple interest.
In cases where developers do not opt for the revival package, the panel wants the state or the real estate regulator to step in and appoint an administrator wherever the project is delayed by two years.
The administrator will be tasked with selecting a new contractor, with all agencies involved expected to take a haircut in line with the rehabilitation package and ensure that homebuyers have a say in the decision-making.
Read More: Real Estate Investment For Retirement: Expert Tips To Build Wealth For Golden Years
The state RERA will also have to identify projects where construction is substantially complete and can be handed over by ensuring that the required approvals are given. In these cases, properties that are almost ready can be handed over to homebuyers, who can complete them without paying the last instalment to the builder.
The committee, which had representatives from the Centre and states, has proposed that Swamih, the fund for revival of stalled projects, should be asked to arrange for money on a priority basis and banks should provide loans at a lower cost, based on a guarantee. This is a model that was used post-Covid to offer relief to MSMEs.
For those with a home loan, and whose account has turned non-performing due to the delay, the proposal is to treat them as “standard assets” for the additional disbursements of existing mortgages which are restructured. “Banks should be allowed to offer fresh finance to new buyers who purchase new inventory in the stalled projects,” a member of the panel said.
While providing funds, the committee wants to ensure that the money is first used to complete the projects and no cash flow is shared with the original promoters till work is finished and all dues of lenders and land-owning authorities are cleared.
Read More:- Adore Group to develop Rs 600-cr luxury housing project in Faridabad
As reported by TOI, the committee has proposed tweaks to the Insolvency & Bankruptcy Code and said that it should be used only as a last resort in case of real estate and wants state governments and banks to avoid “unnecessary” litigation.
Several cases, where the committee of creditors has cleared the plan, have been held up due to litigation in the National Company Law Tribunal or other legal forums.
