Builders who are buying group-housing or commercial land in Noida can only do so on a down payment of 20% of the total land cost, the Noida authority said on Thursday.
Earlier, builders were required to pay 10% of the total land cost. Authority officials said that the move was necessary due to a large number of builders turning defaulters, leaving the authority staring at a financial crisis. The authority is struggling to recover around Rs25,000 crore in land dues from builders.
Officials said that builders have stopped paying instalments of land cost to the authority, citing dip in sales of flats.
“The authority has allotted 1,26,000 sqm of prime group housing land in Sector 43 to Shipra Group, under the new policy. The realty firm will be able to take possession of this land only after making a down payment of 20% of the land cost,” SC Gaur, chief architect and town planner of the Noida authority, said.
Shipra Group has purchased the land for Rs900 crores, officials said.
An official with the authority said, “After paying 20% of the total land cost for taking possession of the land, the builder will have to pay the remaining amount in instalments over the next seven years.”
As per the policy effected in 2007-08, builders paid 10% of the land cost at the time of purchase and the remainder was to be paid in instalments. However, most builders are failing to pay the remaining cost of land and their dues multiply as they are charged 12% interest on the remaining payment and the interest keeps increasing if they fail to pay instalments on time, an official said.
Homebuyers said that the authority should only allot land to a builder upon payment of the total land cost at the time of allotment so that property buyers are not affected.
“The authority gives seven years time to a builder to repay the remaining 80% land cost. But the builder recovers a flat cost in three years. Why should a builder be given so much time? Builders should not be allowed to sell flats or plots until the total land cost is paid,” Shashank Mishra, a home buyer in 3C, Noida, said.
Homebuyers said that the main reason for the delay in delivery of flats is that builders divert the profits from a project into other projects, instead of clearing land dues.
“Builders are benefited as they do not have to pay the authority but are allowed to collect money from buyers,” Annu Khan, president of Noida Estate Flat Owners Association, said.