Relief for developers! UP may re-introduce ‘zero period’ policy for stuck housing projects

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Updated: November 27, 2019 4:50:52 AM

It’s 'under review' at present and the state government could come out with an announcement before the end of this month.

real estate sector, real estate industrySources in state government said zero period is being “actively considered”.

The Uttar Pradesh government is actively considering re-introducing Zero Period policy, which was implemented to compensate developers whose projects got stalled due to farmers’ agitation in Greater Noida in 2011-12, resulting in court cases. The compensation was in the form of exemption from interest on land dues. A similar proposal is being worked on to deal with stuck projects in the state, which has the largest pile of incomplete flats in the country.

Sources in state government said zero period is being “actively considered”. It’s “under review” at present and the state government could come out with an announcement before the end of this month. “See, it’s not as if the state was oblivious to the crisis all this while. Zero period was there. Then in 2016, UP introduced Project Settlement Policy (PSP). Now, the government feels there is a need for an intervention again in the interest of homebuyers. An announcement can be expected in 10-15 days,” said one of the sources.

Zero Period policy stipulates that if a project was stalled due to a stay order from any court or national green tribunal (NGT), or the state RERA delayed possession deed execution, or the land was not acquired by authority at the time of handover or in case actual construction on site could not be started by the developer due to absence of approach road, then the affected period may be declared as a zero period. Developers, in such cases, are exempted from penal interest and dues, albeit with some conditions.

Talking about specifics of the proposal, another source said that there were a total of 98 projects stalled at various stages. Around 1.58 lakh units are stuck. Of these, 20 projects are at various stages in courts and National Company Law Tribunal (NCLT). These were identified through a report by forensic auditor Currie and Brown (C&B) last year. It was commissioned by Uttar Pradesh (UP) RERA.

“There are 74 projects where government can provide relief. Over 95,400 flats are stuck in these projects, of which 65,670 have been sold. To complete these units, close to Rs 11,000 crore would be required and the future receivables from these projects is around Rs 29,400 crore. Of the 74 projects, 80% construction is done in 20, 60% (in 18 projects) and 36 projects have less than 60% work done,” he explained.

When contacted, UP RERA member Balwinder Kumar told FE that Zero Period policy has been recommended by the Uttar Pradesh group of ministers (GoM) in 2017 and also the high level committee under the chairmanship of ministry of housing and urban affairs (MoHUA) secretary, DS Mishra a year later.

“The PSP could help us in solving the issue of stalled housing units. High-level panels have recommended zero period, too. The state government has expressed serious concern over the distress to homebuyers and is very actively considering it,” he added.

Kumar said that recommendations, such as option to bring in a co-developer to complete projects where vacant land is available and the original builder does not have funds, should also be considered. “Besides, we recommended in our interactions with state government that if a builder is left with surplus land or additional floor area ratio (FAR), then the builder should be allowed to surrender it. This will aid authorities in re-utilising land parcels,” he explained.

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