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The state government of Uttar Pradesh is contemplating a rehabilitation package for stalled real estate projects, drawing from recommendations made by an expert committee led by bureaucrat Amitabh Kant. During a meeting in Lucknow on September 28, it was unanimously decided to grant a four-year "zero period" to developers. This period entails waiving interest payable on land dues and penalties on default, covering two phases: from April 1, 2020, to March 31, 2022, due to COVID-19 disruptions, and from August 14, 2013, to August 19, 2023, when construction was halted by the National Green Tribunal to demarcate an eco-sensitive zone for the Okhla Bird Sanctuary.
The "zero period" policy prevents builders from recovering penalties, additional costs, or interest from buyers during these specified periods. Although officials at the meeting, including CEOs of Noida, Greater Noida, and Yamuna Expressway authorities, as well as the state industrial development commissioner, broadly supported this concept, they couldn't reach a consensus on delinking registries from builders' payment of land dues. This disagreement primarily stemmed from concerns that it would relinquish authorities' control over the dues repayment process.
Addressing funding gaps in stalled projects, the Kant-led committee has suggested granting additional floor area ratio (FAR) to projects in exchange for additional charges paid to the government. The additional revenue would stem from the built-up area created through this process. This approach, coupled with incentives like expanding commercial space in projects, could form part of the forthcoming rehabilitation package.
Additionally, the three authorities (Noida, Greater Noida, and Yamuna Expressway) have proposed granting builders an extra three years to complete projects without incurring time-extension charges.
One of the key policies that will pique homebuyers' interest pertains to the registration of flats. In Noida, registries in various projects have been held up due to disputes between developers and the government over unpaid dues. Homebuyers have frequently protested, demanding the delinking of registries from these financial disputes. Presently, flat-wise registration is allowed upon obtaining partial occupancy certificates, provided proportionate dues are settled, although this has had limited effectiveness.
Some policies might necessitate amendments before a final decision is reached. Currently, if dues are not cleared, the authorities cancel the lease deed for the entire project. However, this policy may change to partial cancellation, whereby only the lease for the incomplete section of the project would be cancelled. Another policy being considered allows for the partial surrender of plots to reduce the burden of dues, with some accompanying amendments.
The three authorities are also open to the Kant panel's recommendations, which propose that, following the implementation of concession rates, developers pay 25% of the total dues within 60 days, with the remaining 75% to be cleared over three years. Developers collectively owe more than Rs 47,000 crore to the development authorities in the district. The Noida Authority is owed Rs 26,570 crore, Greater Noida has dues amounting to Rs 14,309 crore, and developers in the Yamuna Expressway Authority area must pay Rs 4,700 crore.
If the concessions under the "zero period" policy are applied, the Noida Authority would forgo Rs 7,400 crore, while Greater Noida would relinquish around Rs 6,000 crore. The Yamuna Expressway Authority's loss would be approximately Rs 1,000 crore.
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