The government's move to extend the timeline for project completions and registrations by six months is expected to help distressed developers in a big way, though homebuyers may have to wait for some time to get possession, experts said.
“This is indeed a move to combat the Covid-19-led disruption, which brought construction work to a grinding halt with additional chaos of migrant labourers' movement and a disruption in the supply of raw materials,” said Niranjan Hiranandani, managing director, Hiranandani Group.
Hiranandani, however, said liquidity infusion is imperative to alleviate the depressing scenario for the sector.
Sharad Mittal, chief executive at Motilal Oswal Real Estate, said considering that projects are likely to be delayed by at least 4 to 6 months because of the lockdown, the timeline extension is a welcome move for real estate developers. “However, it does not address the larger liquidity and cashflow-related challenges faced by developers,” he said.
Anuj Puri, chairman, Anarock Property Consultants, said: “Homebuyers’ wait for their homes will get extended by this move, but this was inevitable, in any case.”
For those who have taken a home loan and are staying on rent, it would be a double whammy since they will have to continue paying monthly rentals and pay the EMIs till their projects are completed.
Announcing the relief package for the industry, Finance Minister Nirmala Sitharaman said the ministry of housing and urban affairs would advise states/UTs and their regulatory authorities to treat Covid-19 as an event of force majeure under the Real Estate (Regulation & Development Act), 2016 (Rera), and the authorities would extend the registration and the completion date suo-moto by six months for all registered projects expiring on or after March 25, 2020, without individual applications. The regulatory authorities may extend this for another period of up to three months, if needed, she said.
Further, the announcement of a Rs 30,000-crore special liquidity scheme for the shadow bankigng sector should ease liquidity woes of stressed real estate players, experts said.