An expert committee has proposed targeted measures to revive over four lakh stalled real estate projects across India, focusing on areas around Delhi and Maharashtra. The recommendations include a project-wise approach to insolvency, a four-year moratorium on payments in Noida, and specific provisions to safeguard home buyers' interests. Headed by G20 sherpa Amitabh Kant, the committee's initiatives aim to alleviate the burden on builders and expedite the possession process for homebuyers. With proposed amendments to the Insolvency & Bankruptcy Code, this move represents a vital step towards resolving a longstanding issue in the housing sector.
In a bold step towards revitalizing stalled real estate projects in India, an expert committee has formulated several measures that will assist builders in completing and handing over properties to homebuyers. The measures, expected to unburden both developers and buyers, encompass over four lakh properties nationwide, amounting to approximately Rs 4.5 lakh crore.
This strategic move primarily targets projects in and around Delhi, including Noida and Gurgaon, as well as Maharashtra, where the majority of the stalled developments are located.
The committee, headed by G20 sherpa Amitabh Kant, has suggested key changes to the Insolvency & Bankruptcy Code (IBC) to adopt a project-specific approach rather than a company-wide resolution. This implies that a single project within a company can be targeted for resolution, safeguarding other ongoing projects.
Furthermore, the recommendations emphasize that the moratorium to creditors during the insolvency process should not apply to homebuyers, ensuring uninterrupted possession of apartments, plots, or villas. It follows a landmark decision by the Insolvency & Bankruptcy Board of India in the case of Jaypee Infratech.
The proposed measures also include a four-year moratorium on payments to land-owning authorities in Noida, broken down into two years for work stoppage around Okhla Bird Sanctuary and another two for Covid-related disruptions. A similar moratorium for Covid-19 can be implemented across the country, providing relief on due payments.
Builders in regions like Noida, Greater Noida, and Yamuna Expressway, who are estimated to owe close to Rs 40,000 crore, have been severely impacted by fines and penalties. The proposed relief is expected to alleviate these challenges, aiding in the timely registration and completion of projects.
To support developers further, incentives such as higher floor area ratio may be monetized, along with proposed haircuts by other agencies. The committee has also suggested that state real estate regulatory authorities (RERA) be actively involved in devising solutions tailored to their specific jurisdiction. The report, submitted to the ministry of housing and urban affairs, categorizes solutions for three types of projects: those not yet begun, those stuck after construction began, and those handed over without individual property registration.
The proposed amendments to the IBC are reportedly ready for implementation, with the law envisaged as a last resort for real estate. It's worth noting that real estate accounts for 21% of the cases filed under IBC, with only 13% resolved, intensifying the plight of homebuyers. With several states, including Uttar Pradesh and Haryana, represented on the panel, consensus on the proposed measures appears promising.
In conclusion, the comprehensive measures proposed by the expert committee signify a crucial milestone in tackling the longstanding issue of stalled real estate projects in India. By focusing on targeted solutions that cater to both developers and homebuyers, the initiative promises a much-needed boost to the housing sector. These strategic interventions align with the broader vision of expedited project completion, offering hope to countless homebuyers awaiting their homes. The cooperation of state governments and the alignment of these proposals with existing regulations will be instrumental in bringing this significant change to fruition.
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