Noida authority to revise interest rate on land dues as per SC order
NOIDA: Responding to Noida Authority’s request for directions on matter of interest to be levied on real estate developers’ land dues, the Uttar Pradesh government on Monday asked it to resolve the issue as per rules.
The direction clears the way for the authority to calculate the net amount due to it based on a previous Supreme Court (SC) order and move to begin registration of flats to thousands of homebuyers.
In July last year the SC directed the authority to charge only 8.5% interest rate. Earlier, it would charge up to 25% in some cases. The Noida authority estimated that it had to receive ₹25,000 crore in land dues, as per its earlier interest rate. The officials are yet to calculate a figure based on the revised rates.
The UP government also allowed developers to pay land dues on a per flat basis. It means if developers want to execute flat registry of 10 flats to homebuyers then they should accept financial dues in proportion to the 10 flats and allow registry. Earlier, the authority had wanted the developer to clear all dues and then execute registry.
“But the developers will have to submit an affidavit stating that they will have to immediately resolve financial dues issue for once as per final order of SC,” said Rajesh Kumar officer on special duty of the Noida authority.
The developers had long been demanding that the authority calculate the financial dues based on the Supreme Court order. They had said that they were ready to submit an affidavit stating they will pay remaining if needed as per a fresh order if it comes in future in this case. The lack of clarity over the interest rates meant that homebuyers could not get their flats registered.
“Now we may take the proposal (of new rates and affidavit) submitted by the developers on board for a decision. And we will follow the directions taken in the board in future,” said Ritu Maheshwari chief executive officer of the Noida authority.
Builders welcomed the order.
“Following the SC order, it will benefit around 20,000 flat buyers, and developers,” said RK Arora, Uttar Pradesh president of national real estate Developers Corporation.
On July 10, 2020 the Supreme Court, while hearing petitions in a matter regarding the Amrapali Group, directed Noida Authority to only charge an interest rate of 8.5%, as per the marginal cost of funds-based lending rate (MCLR) on land cost, fixed by the Reserve Bank of India, on land dues of developers. The order came in response to Noida-based developer ACE Group, through a plea, demanded that the “unreasonable” interest rate on group housing land should be looked into. ACE Group’s plea was clubbed with the Amrapali case. However the authority is yet to settle the financial issues of the developers in the light of the SC order because it has challenged the SC order in the Apex court. The SC will hear the authority plea challenging decision on interest on April 12. The developers had requested that the authority should calculate financial dues as per SC order with 8.5% until further decision is taken by the SC. The Noida authority had sought approvals from the UP government on this demand.