Realtors hail UP govt's move to exempt penalty on projects delayed due to litigation

Realtors in NCR have hailed the Uttar Pradesh government's decision to exempt penalty and other dues of builders whose projects are stalled due to litigation but also hoped the order is implemented from retrospective effect and all such delayed projects are covered.

Mohit Goel, CEO, Omaxe Limited said the decision will provide relief to home buyers and developers alike.

"The real estate industry will be extremely happy to provide benefit of waiver of penal interest to end users as no developer intends to penalise buyers, but are forced to do so as developers are subjected to the same for no fault of theirs. We hope the government implements it from retrospective effect and cover all such projects," he told PTI.

Dhiraj Jain, Director of Mahagun Group said any litigation, even if it is on frivolous ground, takes a lot of time to get resolved and tiill such time, the projects get delayed and because of the uncertainty both the sales and collection are adversely impacted.

"In such a scenario imposing penal interest adds to them the problem. The decision of UP cabinet is therefore absolutely perfect and needs to be implemented by other states as well," Jain said.

Deepak Kapoor, Director of Gulshan Homz, said the burden of delay falls on both developers and buyers as their effective cost increases.

"In this context, it (the decision) a welcome respite for all the stakeholders," he added.

Ashish Agarwal, Director of Aditya Builders, said the decision was one of the long pending demand of the industry in the larger interest of the homebuyers.

"It's a welcome step and further emphasises on the commitment of the government to revive the real estate sector which is a major contributor to the country's GDP and second largest employer after agriculture," Agarwal, also the Ghaziabad unit treasurer of realtors body CREDAI, said.

"The timeline of June 2021 will, however, limit the beneficiary projects and should be considered," he added.

Property consultant CBRE said that with the UP government's move not only will builders be excused from paying penalties but it will also provide them relief in restructuring their finances.

"On the other hand, the clause 'benefits to be cancelled in case project is not completed by June 2021' will ensure that buyers' interest remains protected," said Anshuman Magazine, Chairman and CEO - India, South East Asia, Middle East & Africa at CBRE.

The UP government on Tuesday decided to excuse builders from penal interest and other dues for the period their project is stalled due to litigation, if they pass on this benefit to the home buyers.

The decision to allow a "zero period" benefit to builders was taken at a meeting here of the state cabinet chaired by Chief Minister Yogi Adityanath.

The benefit will apply to builders who are set to provide homes to buyers by June 2021, Industrial Development Minister Satish Mahana told reporters.

The state government expected one lakh new homes to be constructed by that time.