Relaxation in project timelines under RERA to bring relief to developers, safeguard interest of homebuyers

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Published: May 13, 2020 11:10:15 PM

Industry experts say it is quite relieving for real estate developers that the deadline date of project completion is extended with new timelines for home buyers.

real estate, real estate in India, Relaxation in project timelines under RERA, developers, homebuyers, FM Nirmala SitharamanInclusion of COVID in the definition of ‘Force Majeure’ or Act of God, and empowering the State/UT regulatory authority to suo moto revise the date of registration and completion of projects by 6 months, is a boost for the already-stressed real estate sector.

Apart from MSMEs, NBFCs and HFCs, the real estate sector got a major boost from the announcements made by FM Nirmala Sitharaman on Wednesday. Providing a major relief to real estate developers, the FM extended the timeline for project completion and registration by 6 months.

“This is a big move that will destress developers significantly, since construction activity had been halted all across the country. Homebuyers’ wait for their homes will get extended by this move, but this was in any case inevitable,” said Anuj Puri, Chairman, ANAROCK Property Consultants.

In fact, inclusion of COVID in the definition of ‘Force Majeure’ or Act of God, and empowering the State/UT regulatory authority to suo moto revise the date of registration and completion of projects by 6 months, is a boost for the already-stressed real estate sector. “This will not only provide more time to complete the project without any liability for delay in completion of the project but will also prevent them from facing the legal cases on account of delay limited to this 6 months’ extension window,” said Sumit Batra, a Tax Expert/Tax Advocate.

Dr Niranjan Hiranandani, National President, NAREDCO, observed, “This is indeed a move to combat the COVID disruption which practically brought construction work to a grinding halt with additional chaos of migrant labourer’s movement and raw material supply disruption. Relaxation in project timelines under the RERA Act will bring in sigh of relief to the developers and safeguard the interest of homebuyers with the revised new timelines for their dream home deliverables.”

Industry experts say it is quite relieving for real estate developers that the deadline date of project completion is extended with new timelines for home buyers. “While the COVID-19 spread has been challenging for several sectors, including real estate, the sector seems to be buoyant with several research reports highlighting that real estate is still considered the best investment option. This will be strengthened more by the various liquidity measures by the finance ministry that will help smoothen the rigidity normally being witnessed in the Indian realty market,” said Ankur Gupta, Joint Managing Director, Ashiana Housing Ltd.

Further, the announcement of Rs 30,000-crore special liquidity scheme for NBFCs/HFCs and MFIs will ease liquidity woes of stressed players. This will benefit the real estate sector significantly, given that NBFCs and HFCs are major lenders to it. As per ANAROCK research, NBFCs and HFCs together contribute almost 56% of total lending to real estate in India currently.

In another major move to revive the MSMEs, the FM tweaked the definition of such companies to provide benefits to many more units. “The collateral-free automatic loan for MSMEs worth Rs 3 lakh crore will give a lifeline to nearly 45 lakh units for four years. With this, the government aims to curtail job losses, and this could indirectly benefit affordable housing. Fear of job losses may have caused many potential affordable home buyers to defer their purchase decisions,” said Puri.

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