As Covid-19 halts construction in country, realtors’ body seeks moratorium for project loans

The National Real Estate Development Council (NAREDCO), a builders’ body, on Tuesday wrote to the union ministry of finance demanding a moratorium of two years for

The National Real Estate Development Council (NAREDCO), a builders’ body, on Tuesday wrote to the union ministry of finance demanding a moratorium of two years for loans taken by builders for realty projects across the country as construction work has stopped in light of the Covid-19 outbreak. The builders’ body has also asked the ministry to issue orders to banks for not collecting monthly instalments for a year from homebuyers who cannot pay their EMIs because of the pandemic.

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“The ministry of finance should give a moratorium of two years on project loans in order to overcome the impact of the pandemic. It is essential that all the project loans for realty projects disbursed by the banks are allowed an unconditional moratorium of two years during which no project account be treated as a non-performing asset; no recovery proceedings will be initiated against any developer, and all national company law tribunal/debt recovery tribunal cases against the developers are withdrawn,” said RK Arora, president, NAREDCO —an autonomous self-regulating body that functions under the aegis Ministry of Urban Affairs and Employment.

NAREDCO said the realty sector was already facing its worst phase in terms of construction of projects and the Covid-19 outbreak will further slow its growth with an adverse impact on sales.

According to the property consultancy group, Anarock, the spread of the coronavirus disease (Covid-19) and the measure need to contain it has stalled construction as workers have left for their hometowns and buyers should expect delays in delivery of projects.

More than 15.62 lakh units (launched between 2013 and 2019) are under construction in seven cities across India. Of these units, Mumbai and NCR together house at least 8.90 lakh units or around 57 percent of the total under-construction units. Noida, Greater Noida, and cities nearby have over 4.25 lakh units which are in various stages of construction.

“Pune has over 2.62 lakh units under construction, followed by Bangalore with 2.02 lakh units and Kolkata with around 90,670 units With most big cities announcing a lockdown till at least March 31st, homebuyers must brace themselves for project delays. Once the crisis is under control, the government will have to take various economic measures to bail out severely-hit sectors,” said Prashant Thakur, director and head of research, Anarock.

Chairman and chief executive officer (India, South East Asia, Middle East, and Africa) of real estate services and investment firm CRBE, Anshuman Magazine, “While addressing the current situation and the impact of Covid-19, the finance minister Nirmala Sitharaman announced various measures to boost the economic growth, including extending tax deadlines and easing business rules that will go a long way in easing situations for all. We are also hopeful that reduction in bank charges for digital transactions and economic packages to those impacted by Covid-19 will further provide the much-needed relief to the realty sector and the economy.”