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State govt should restructure land dues of builders: Credai
NOIDA: The Confederation of Real Estate Developers Association of India (Credai), a builders’ lobbying body, Thursday said the Uttar Pradesh government should restructure
NOIDA: The Confederation of Real Estate Developers Association of India (Credai), a builders’ lobbying body, Thursday said the Uttar Pradesh government should restructure land dues, which are delaying housing projects in Noida, Greater Noida and Yamuna Expressway areas.
As per an estimate by the officials of three authorities, there are around 300 delayed housing projects in the three industrial towns.
Office-bearers of Credai addressed the media in Noida’s Sector 27 on multiple issues which are affecting the growth of the realty sector and delaying the delivery of flats to homebuyers.
Credai said these issues are due to miscalculation of financial dues of builders, misuse of the Indian Bankruptcy Code (Amended), 2018, unnecessary financial burden on builders, and multiplicity of authorities dealing with builders, among others.
“One of the biggest issues that affect this sector is the miscalculation of financial dues of builders. For example, if a builder has some amount of land dues, to be paid to Noida or Greater Noida authorities, the lower-rung officials keep imposing an interest on this due amount wrongly. As a result, the builder gets into a debt trap and fails to deliver flats. Like a sahukar (money lender), Noida, Greater Noida or Yamuna authority charge interest at the rate of 17% to 42%. That is unreasonable,” Manoj Gaur, chairman, affordable housing committee, Credai.
Noida, Greater Noida and Yamuna Expressway authorities need to recover around ₹35,000 crore dues from over 300 builders. If a builder defaults on payment, the authority charges 14% interest to begin with and keeps increasing the interest rate if the builder continues to default.
Credai said it has written to the UP government and the central government asking them to look into all these issues and address them.
“There are 257 sectors which are dependent on the real estate sector as the latter creates jobs for skilled and unskilled workforce on a large scale. If the government addresses these issues, it will help in job creation in all sectors. The UP government has assured us that a committee, headed by the chief secretary, will look into financial dues and issues of miscalculation,” Gaur said.
Credai also said provisions of Indian Bankruptcy Code are being misused and one single buyer can disrupt the functioning of a real estate company that has the responsibility to deliver houses to thousands of buyers.
“There are 1,138 real estate companies facing insolvency cases and corporate insolvency law is being misused. For example, in a 500 -unit housing project, where 499 flat owners want to get flats delivered and one goes for litigation, dragging builder to the corporate insolvency tribunal, then the tribunal will take over the company, jeopardizing the interest of 499 buyers. We have also demanded that the UP Real Estate Regulatory Authority (UP-Rera) be the only expert agency to resolve issues of this sector. Other courts such as consumer forums or National Company Law Tribunal should only be involved with UP-Rera’s permission,” Rohit Raj Modi, governing council member, Credai, said.
Builders said there are many cases wherein if a builder owes ₹20 lakh to a contractor, insolvency proceedings can be started against the builder, affecting the interest of thousands of buyers.
“The consent of 2/3rd of allottees of a project should be required to trigger insolvency proceedings against a promoter,” Prashant Soloman, treasurer, Credai NCR cell, said.
The UP-Rera also requested from government to make changes in Rera Act to make it more powerful.
“If realty sector issues are taken up by multiple forums, it will affect the growth of this sector. We hope that the government will give more power to Rera so that buyers can get timely justice,” Balvinder Kumar, member, UP-Rera, said.
