The UP government is likely to announce soon – possibly next week – a rehabilitation package for legacy stalled projects, based on recommendations made earlier this year by an expert panel led by ex-CEO of Niti AayogAmitabh Kant.
Keenly watched by realtors and homebuyers, the package is likely to contain a rescheduling scheme that allows dues, builders owe to the state, to be settled in instalments.
Decision soon on delinking registries, payment of dues
The UP package is likely to contain a rescheduling scheme that allows dues, builders owe to the government, to be settled in instalments, a co-developer policy to facilitate the completion of stuck flats, and an extended ‘zero period’ under which interest and penalties can be waived for projects hit by the pandemic and construction ban.
Sources said the package closely aligns with the Kant panel’s recommendations and is likely to benefit around 2 lakh homebuyers in Noida who are facing long delays in the delivery of their flats or can’t register them even if they have got possession because of the deadlock between builders and the Noida Authority of the calculation of dues. Collectively, developers owe the three development authorities in Gautam Budh Nagar in excess of Rs 50,000 crore.
Over the next few days, the sources said, a decision will also be taken on whether to delink registry of flats from payment of land dues by builders. As of now, flat-wise registration is allowed through partial occupancy certificates once proportionate dues are cleared by a builder. This, however, has had limited effect.
At a meeting last month in Lucknow, the three industrial authorities in Gautam Budh Nagar had expressed concern about dues and registries being delinked, saying they would lose control over the repayment process.
A senior official said on Monday a report outlining the details of the state government’s package was ready and objections and suggestions from the departments of law and finance had been incorporated in it too.
“A formal announcement will be made next week. Preparations are under way to execute the recommendations of the Amitabh Kant committee as much as possible. A detailed plan has been prepared after high-level meetings. Significant relief could be in store for flat buyers who have been waiting for registry for years,” the official said.This March, the Centre formed a 14-member committee to suggest ways to complete stalled projects. It submitted a report in July. Apart from allowing zero period benefits, co-developers for stuck projects and payment of dues in instalments, the committee also sought to address funding gaps by proposing to grant more floor area ratio (FAR) on payment of additional charges to the government.
The zero period in Noida, the panel suggested, could apply to two phases – from April 1, 2020, to March 31, 2022, due to Covid disruption, and from August 14, 2013, to August 19, 2013, when the National Green Tribunal halted construction until an eco-sensitive zone for the Okhla Bird Sanctuary was demarcated.
The Noida, Greater Noida and Yamuna Expressway authorities have assessed the recommendations and submitted reports to the UP industrial development commissioner Manoj Kumar Singh. If the provision of a ‘zero period’ alone is allowed, the Noida Authority might have to forgo Rs 7,400 crore in dues, it has informed the government. The Greater Noida and Yamuna Expressway authorities might have to give up around Rs 6,000 crore and Rs 1,000 crore, respectively.
Collectively, builders owe about Rs 52,000 crore to the three authorities. Of this, Noida needs to collect Rs 26,570 crore, Greater Noida Rs 14,309 crore and Yamuna Expressway Authority over Rs 4,700 crore. The Kant committee has also suggested that builders should be given three more years to complete stuck projects without being asked to pay extension charges.
Another recommendation is that the developers’ dues should be calculated at the SBI MCLR rate from June 2020. Those willing to surrender projects may be allowed to do so. But only builders who deposit 25% of the dues upfront and commit to repaying the remaining sum over a period of three years are to be allowed the benefits, the committee recommended.