GB Nagar’s sub-lease plan faces flak from Noida authority, legal experts, homebuyers
The Gautam Budh Nagar district administration’s sublease agreement proposal may open nefarious routes for builders, that will trouble industrial development authorities as well as homebuyers in the long run, experts and buyers have said.
The district administration has come up with a plan to address the issue of non-registration of flats by builders who are either unable to clear their dues to the authorities, or have given possession of properties without getting an occupancy certificate (OC). Builders cannot execute a registry with buyers, and transfer the property title because they are ineligible for an OC on several grounds, including pending land dues, and incomplete housing complexes at the scheduled time of possession. According to administration officials, the non-execution of registries of properties in the district has cost the administration revenues to the tune of Rs 1,000 crore.
The Noida authority, as well as legal experts and homebuyers worry that many builders can misuse this route to shirk responsibility.
“With the new order, the district administration will be able to earn revenues around Rs1,000 crore. But the Noida authority, which is owed around Rs 20,000 crore from several builders, will struggle to recover its land dues. Since the builder now has an option to allow possession and an agreement to sub-lease without paying land dues, they may misuse this opportunity. If builders do not pay land dues, buyers will continue to fail in getting the clear property title transferred,” said PP Nagar, president, Bar association of Noida (deed writers and advocates).
The district administration said they have allowed the agreement to sub-lease as per Section 35 of the Indian Stamp Act, in order to recover revenue they receive from buyers in the form of stamp fees.
“We want that buyers who have shifted into their flats get at least one legal document that empowers them and helps them claim their right over the flat,” BN Singh, district magistrate, Gautam Budh Nagar, said.
The sub-lease plan is supposed to help the administration to earn revenue, and benefit homebuyers, who will have to pay stamp duty at the prevailing circle rates, and not potentially higher rates that may be in force at a later date when the builder gets OC, officials have said.
“The new plan will help homebuyers, as they will not have to worry about an increase in the circle rate in future. As far as the misuse of this new plan is concerned, it is up to the government to contain it,” said Prashant Tiwari, president, Confederation of Real Estate Developers Association of India (Credai), Uttar Pradesh unit .
“We will look into this issue once we get the official details. But, if the builder starts offering possession through this route, it will reduce the pressure on them,” Inder Vikram Singh, additional chief executive officer, Noida authority, said.
For example, the realty firm Omaxe needs to pay around Rs 250 crore land dues to the Noida authority, and is yet to get an OC for its Grand Omaxe housing project in Sector 93B, which has been pending for several years.
“As many as 300 homebuyers in Omaxe projects paid stamp fees to the administration in 2012. But in this time, the builder has made no effort to pay their dues to the Noida authority. It means buyers are suffering as they are yet to get the flat title in their name. The same issue can happen with other buyers, who take the agreement to sub-lease route, as the government does not care for homebuyers’ issues,” Anil Chaudhary, an advocate, said.