The government's move to extend timeline for project completions and registration by six months is expected to help distressed developers in a big way, though it would extend the waiting for home buyers, experts said.
"This is a big move that will destress developers significantly, since construction activity had halted all across the country. Homebuyers’ wait for their homes will get extended by this move, but this was in any case inevitable," said Anuj Puri, chairman Anarock Property Consultants.
Announcing the relief package for the industry, the Finance Minister said the Ministry of Housing and Urban Affairs would advise States/UTs and their regulatory authorities to treat Covid-19 as a ‘Force Majeure’ event under RERA or Real Estate (Regulation & Development Act) 2016. The authorities would extend registration and completion dates suo-moto by six months for all registered projects expiring on or after March 25, 2020 without individual applications.
Regulatory Authorities may extend this by another three months, if needed, she said.
"The measure will help the industry offset losses caused by the absence of construction during the lockdown. This will immensely help development firms and allied industries. However, an extension of a year is what the industry had asked for," said Ankush Kaul, president, Ambience Group.
Added Piyush Gupta, managing director, capital markets (India), Colliers International: "Extension of RERA timelines beyond lockdown period by six months will be a relief to developers who are not defaulting on project completion time lines.”
Further, the announcement of Rs 30,000 crore special liquidity scheme for NBFCs/HFCs and MFIs will ease liquidity woes of stressed real estate players, experts said.
"This will benefit the real estate sector significantly, given that NBFCs and HFCs are major lenders to it" said Puri of Anarock. As per Anarock research, NBFCs and HFCs together contribute almost 56 per cent of total lending to real estate in the country currently.