Rajasthan housing department eases norms for stressed real estate

The Urban Development and Housing (UDH) department has provided some relief to the real estate sector by giving relaxation in depositing betterment levy fee, which is charged on additional floor area ratio (FAR).

At present, the developers must deposit betterment levy (25% of the reserve price) in four instalments. While, 25% of the amount is deposited at the time of building plan approval, remaining 75% must be deposited in instalments generated after every six months.

As per the relaxation, the developers can deposit betterment levy after one year from building plan approval. This is much-needed breather to real estate developers who are facing financial setbacks. Rajasthan Credai chairman Gopal Das Gupta said, “The developers were demanding this relaxation in the state since long. Till the time additional FAR is utilised, the government was taking 75% of the betterment levy from the developers, which was a burden.”

In its representation to the Real Estate Regulatory Authority (RERA), which was submitted on Monday, the developers have mentioned due to recession and lesser money with buyers, there is a strong possibility of people trying to cancel their booking by taking various pleas.

This would lead to a steep cash crunch and with very low sales expected in future the promoters might take 1-2 years to recoup the availability of funds. Also, there will be non-availability of financial resources for developers.

“The finance providers would now prefer to invest in assets with the lowest risk and would shy away from ongoing projects. Even the rate of interest could be higher, going forward, there would be a race towards ‘safe deals’. So, it looks that new lending may now be almost impossible or very difficult and if it is then it may be on very unfavourable condition to the promoter,” reads Credai memorandum.

The developers demanded RERA to declare period of March 15, 2020 to December 2020 as period of Force Majeure and no liabilities and penalties under the act may be attracted either towards the allottees or authority, for the said duration, thereby providing complete relief to the projects.