Hope for homebuyers, developers see business in stuck projects

The number of stuck projects is huge and reasons are mostly related to the liquidity problem and financial crunch. In such a scenario the best solution is to give them to the developers who have a good record so far.

Real estate developers in Delhi-NCR are sensing business opportunity in completing over two lakh flats that have not been completed and some are taking over stuck projects, rebranding them to sell these unsold apartments at a premium.

Noida’s ATS Group has formed a separate company, ATS Nirman, and has already taken over three stalled projects and is in line to take over more. The business has a potential of Rs 30,000 crore in next five years, said Getamber Anand, CMD of ATS Group. The company takes over projects through the Real Estate Regulatory Authority (RERA) as they need to be deregistered first, he said.

“We are not calling it a project management consultancy but a project revival consultancy,” Anand said. “With ATS branding and assurance, the existing customers’ trust is gained.”

Ashish Sarin, CEO of Gurgaon-based Alpha Corp, said developers are exploring alliances to jointly develop stalled projects through revenue-sharing pacts. “Instead of launching new projects, they are taking over incomplete projects and assuring timely delivery,” he said.

Sarin said stuck projects leading to slowdown in the market is one of the factors contributing to prolonged stress in the real estate industry. “For developers struggling to complete projects, joint ventures or joint developments offer a viable means to overcome financial distress and find synergies,” he said.

As per government estimates, around 458,000 housing units are stuck across more than 1,600 projects in the country.

“It is a good trend as it will help finish the stuck projects faster and helping the buyers get their homes. The projects that were in bad shape were acting as blots on industry, affecting the image of the sector that has good intention of meeting the housing demand of people,” said Manoj Gaur, MD of Noida-based Gaurs Group.

“The number of stuck projects is huge and reasons are mostly related to the liquidity problem and financial crunch. In such a scenario the best solution is to give them to the developers who have a good record so far. The intention should be to hand over the homes to the buyers as soon as possible,” said Deepak Kapoor, director, Gulshan Homz.

Source: https://economictimes.indiatimes.com/wealth/personal-finance-news/hope-for-homebuyers-developers-see-business-in-stuck-projects/articleshow/72901348.cms

UP Rera cancels registration of five stuck realty projects in Gautam Budh Nagar

With an aim to assist homebuyers get returns on their investments, the Uttar Pradesh real estate regulatory authority (UP Rera) cancelled the registration of as many as five realty projects located in Gautam Budh Nagar on December 6. This brings the number of deregistered real estate projects in the district to six. The move comes in light of developers allegedly failing to deliver the projects to buyers. However, the deregistrations have not yielded any result for buyers.

According to the law, the Rera has the right to deregister a project if the developer abandons it. After deregistration, a developer loses control of the project and the Rera has the right to either transfer rights to buyers or to a new developer.

The Rera gives an opportunity to the apartment buyers’ association to take over the stalled project and if this does not work out then a co-developer (a new developer) is engaged to revive and deliver the project.

The regulatory authority, which was formed under the Rera Act 2016 to address issues in the realty sector, has been unable to deliver justice due to legal hurdles.

“We had high hopes from real estate regulatory authority when it was formed in 2016. We thought it will deliver justice as promised in a time-bound manner and we will be able to either get our flats or our investments refunded. But we are clueless what to do now because filing case in Rera has provided no solution so far,” said Arun Chauhan, a buyer, whose family had bought two flats in Unnati Fortune Group’s Aranya project in Sector 119.

Officials of the Unnati Fortune Group were not available for comments even after repeated attempts to reach them.

The first time that UP Rera deregistered a project was Unnati Fortune’s Aranya – a residential project – in May this year, so as to allow the apartment owners’ association to finish it or bring in a co-developer.

“The Rera had deregistered the Aranya project and later, the matter reached National Company Law Tribunal (NCLT) before we could bring out any solution. The government has laid down a process giving models to revive the realty sector and Rera is working on available models to deliver justice,” said Rajive Kumar chairman of the regulatory authority.

Similarly, the Rera’s move to allow buyers’ associations to take over a Noida-based housing project by Shubhkamna developer was disrupted as the matter was taken to the NCLT.

Another project deregistered by the Rera is mixed-land use project Mist Avenue (Festival City), located in Sector 143 along the Noida-Greater Noida Expressway. The promoter of Mist Avenue is lodged in Delhi’s Tihar jail and hence unavailable for comment.

The rest of the projects deregistered by the Rera are all located in Greater Noida.

The authority hopes that in future, the Rera Act 2016 provides better solutions for the realty sector and its investors.

“Whenever a new law comes into being, it has scope for improvement and revision. And with time, the Rera Act 2016 will have more clarity on complicated legal issues and will be more useful to this sector. And even now it has emerged into a successful model,” said Kumar.

According to Rera officials, engaging co-developers is not easy because of debt liabilities associated with distressed projects – no co-developer has taken up any of the six de-registered projects due to liabilities and financial strains of those projects.

“Co-developers worry about the debt that a distressed realty project already has from banks or other agencies and the rules are not explicit. There needs to be more clarity about the co-developers’ liabilities and profit portion. Once this is done, bringing about a co-developer will be convenient,” said Kumar.

“We have demanded from the government that Rera should be given more powers to deliver timely justice for the realty sector. In some cases, petition in NCLT disrupted ongoing proceedings in Rera, thereby delaying justice. We demand that the Rera should address real estate sector cases first before they reach any other court, such as NCLT,” said Prashant Tiwari, president of confederation of real estate developers association of India’s (Credai) Western UP wing.

Source: https://www.hindustantimes.com/real-estate/up-rera-cancels-registration-of-five-stuck-realty-projects-in-gautam-budh-nagar/story-aVbe6Rz3Db3AlUOF8zutOK.html

UP-RERA sends letters to over 1200 realtors informing about stress fund

New Delhi

The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has sent letters to 1227 realtors across the state informing them about the benefit of stress fund scheme announced by central government recently.

“The step has been taken in order to ensure that the promoters of such projects are aware of the scheme so that
the projects are completed, and the home buyers of such projects are able to get their home,” said the authority in a media release.

The authority also held a meeting in November with all promoters informing them about the scheme so that they are able to apply for the last mile funds under the stress funds in time and in a proper manner.

Eligibilities which a project should meet to be able to avail the said fund:

  1. Project should be RERA registered
  2. Project is stalled due to lack of funds
  3. Project falls in affordable and middle-income group segment
  4. Project should be net worth positive
  5. Pricing of units shall not be more than Rs 1.5 crore, if the project is located in NCR region and upto or less than Rs 1 crore for rest of India
  6. Priority for projects very close to completion
  7. Carpet Area of housing units should not exceed more than 200 sq meter

The central government in November had proposed fund of Rs 25,000 crore to complete pending realty projects. Out of the total, government infused upto Rs 10,000 crore initially and the rest is to be contributed by banks, LIC and other sources.

The fund will be set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI and would be professionally run. For the first AIF under the special window, SBICAP Ventures has been engaged to be the investment manager.

Source: https://realty.economictimes.indiatimes.com/news/industry/up-rera-send-letters-to-over-1200-realtors-informing-about-stress-fund/72393122

Give membership details at regd SROs, MahaRERA tells builders

Mumbai

To ensure more professionalism and avoid frauds, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has mandated promoters (builders) to disclose membership details at its registered self-regulatory organisations (SROs).

The main role of SROs involves to create awareness programmes and encourage its members to comply with the provisions of the Act, rules and regulations, circulars issued by the MahaRERA regularly. A copy of the order is with the Free Press Journal.

Commenting on the development, Manju Yagnik, vice chairperson Nahar Group and vice president NAREDCO (Maharashtra) said, “With this inclusion, the SRO will now be responsible for its members adopting the RERA principles, rules and regulations in a more holistic manner.

The move will beneft consumers in terms of responsiveness and transparency. It will also allow SROs to enable developers to ensure greater professionalism on their part, and build confidence and credibility for their brand.”

Likewise, Parth Mehta, the Paradigm Realty managing director, stated, “It is another wise move to bring parity and professional code of conduct to the real estate practices across the state.

The SROs will encourage members to comply with the RERA Act provisions and implement MahaRERA rules and regulations. Unfair activities practised by developers have shaken the confidence of home-buyers, impacting the sector at large.

The move will restore trust deficit between home-buyers and developers, giving a boost to investment in the real estate sector.”

From December 1, builders applying to MahaRERA for registration of their real estate projects shall have to disclose their membership details with registered SROs.

Currently, the registered SROs with MahaRERA are Maharashtra Chamber of Housing Industry (MCHI), Confederation of Real Estate Developers Association of India (CREDAI), National Real Estate Development Council (NAREDCO).

While any other group, federation of promoters interested to be registered as an SRO with MahaRERA can apply online. They should have at least 500 MahaRERA registered projects of their members. Once approved, the SRO registration will remain valid for five years, according to MahaRERA.

Source: https://www.freepressjournal.in/mumbai/give-membership-details-at-regd-sros-maharera-tells-builders

Madhya Pradesh’s RERA gets judicial teeth, first in the country

Bhopal

Real Estate Regulatory Authority (RERA) of Madhya Pradesh became the first realty regulator in the country to get judicial teeth. Retired district judge, DN Shukla was appointed as first executing officer of RERA on Wednesday.

With the appointment of execution officer it will be legally binding on parties, including realtors and consumers, to follow the directives of the authority.

MP government had amended RERA rules for the purpose and issued a gazette notification facilitating appointment of an executing officer.

In the present set up, if RERA passes an order and the party concerned is unwilling to accept it, RERA moves the civil court. In such a situation, odds are that the matter may get delayed in legal procedures.

Going by RERA statistics, out of the 3,800 complaints it received so far, 2,600 have already been disposed, while 1,200 are pending. Of the total disposed cases, 88% went in favor of allottees, while the remaining 12% went in favour of builders. It means 2,300 went in favor of allottees while 300 to builders.

Of the total 2,300 orders that went against builders, there are about 400 cases in which builders are not complying with RERA orders. The execution officer with powers of both the civil and revenue court would now ensure the compliance of RERA orders.

The appointment required amendments in state RERA rules 27 and 28 that deal with recovery of interest; penalty and compensation; implementing the orders; directions and decisions of the authority. State government did the needful on the proposal of RERA.

The executing officer would take charge in a week. A panel of legal experts comprising senior judges and law secretary conducted interviews after inviting applications and finalised the name of DN Shukla.

Once the executing officer takes charge an allottee in favour of whom order was given by RERA against the builder and the builder is not accepting it, can approach the execution officer in 90 days. The execution fee would also be borne by builders once the order is executed and allottee need to pay only a token sum of Rs 1,000.

RERA chairman Anthony deSa confirmed no other state in country has an executing officer, as of now. He said, it would further strengthen the authority and ensure that its orders are followed without fail.

Source: https://timesofindia.indiatimes.com/city/bhopal/mps-rera-gets-judicial-teeth-first-in-the-country/articleshow/72150219.cms

Big relief to home buyers! RERA moots policy to complete stalled projects

The authority recommended that such a policy can be formulated on the lines of Section 8 of the Real Estate (Regulation and Development) Act, 2016, under which it can allow completion of pending developmental work in a stalled project.

In a bid to provide relief to homebuyers in cases of stuck projects, Uttar Pradesh (UP) RERA has suggested to the state government to formulate a policy where the authority can direct homebuyers to form an association, which will then work on completing the stalled housing units. Else the authority, with participation of homebuyers, can go to the open market to hire a co-developer.

The authority recommended that such a policy can be formulated on the lines of Section 8 of the Real Estate (Regulation and Development) Act, 2016, under which it can allow completion of pending developmental work in a stalled project.

A senior state government official said UP RERA, in a letter to the state government, has suggested forming a policy on lines of Section 8. “The authority said progress of projects and timely completion is dependent on utilisation of money collected from homebuyers. To ensure this, it got around 210 projects audited and took necessary action based on the audit. It de-registered some projects and made a reference to the state government for deciding a policy about proceeding under Section 8 of the Act in such matters,” he added.

If this Section can be further utilised in a “more legalised institutional setting”, then RERA would be able to provide relief to around 25,000-30,000 home buyers. The state government is reviewing the proposal, the official said.

Section 8 provides that upon lapse of registration or revocation of registration under RERA, the authority may consult the government to take such action as it may deem fit, including carrying out the remaining development works by a competent authority or an association of allottees or in any other manner, as may be determined by it.

When contacted, UP RERA member Balwinder Kumar told FE, “We have written to the state government that first we can invite the homebuyers’ association to work with us for completing the remaining development work. If that is not possible, we will go to the open market and select a co-developer in a transparent procedure to complete pending work. It is important that we search within our own official spheres to find solutions for stalled projects.”

Another UP RERA official said top priority is providing relief through prompt hearing and complaint redressal. UP RERA’s track record proves this, he said, adding, “Before RERA, only 2,014 complaints were disposed by officials in the state of the total 5,139 registered complaints. However, this changed with formation of RERA. Around 12,780 complaints were filed and 8,506 complaints decided till August 2019.”

“Number of registered complaints in UP and their disposal by RERA is highest in the country,” the official noted. He added that there are a couple of cases in UP and Madhya Pradesh where the authority took action under Sections 7 and 8.

“The authority is also getting stressed projects inspected and has developed a mobile application for preparation and submission of reports online. These are uploaded on the web page of the project concerned. It has also issued show-cause notices to 21 projects in NCR and 17 non-NCR projects, where promoter has either not obtained completion or occupancy certificate nor applied for extension of project registration, but work is either going on or is stalled,” he explained.

UP RERA has also set up a panel of auditing firms for financial and forensic audit of projects and will soon embark upon the verification of escrow accounts of projects through the auditing firms on the panel of Institute of Chartered Accountants of India (ICAI).

At present, more than 17,900 complaints have been registered with UP RERA, which is the highest in the country. Of this, over 10,500 complaints have already been decided.

Source: https://www.financialexpress.com/industry/big-relief-to-home-buyers-rera-moots-policy-to-complete-stalled-projects/1766794/

MahaRERA to soon have 27 conciliation panels for timely project completion

Pune

The Maharashtra Real Estate Regulatory Authority (MahaRERA) will soon have 27 conciliation panels across the state to help address issues between aggrieved consumers and developers and ensure completion of projects on time.

MahaRERA also wants to ensure through the panels that the buyers get what they pay for. Currently, 15 conciliation panels are in operation — 10 in Mumbai and 5 in Pune.

The panels have so far resolved nearly 400 cases of the 541 it received, MahaRERA officials said. The additional 12 panels will be for Pune (1), Thane, Navi Mumbai, Nashik and Nagpur.

These panels comprise a consumer representative and a developer representative, who interact with banks, homebuyers and builders for timely completion of the projects. A recent meeting of the housing ministry had appreciated the formation of the conciliation forums in Maharashtra and urged all other states to replicate the model.

Mumbai Grahak Panchayat (MGP) chairperson Shirish Deshpande, who had taken the lead in forming such forums, said citizens have been registering for conciliation as they believed it would be a quicker process (if both the parties were willing) rather than waiting for a long-drawn case.

“The response towards the forums has been encouraging, both from the consumers and the developers. Keeping this in mind, it was decided to increase the number of such forums,” he said.

The conciliation panels help interact home buyers, builders and banks to maintain the stipulated time declared by the developer on its website.

Earlier last month, MahaRERA ordered seizure and auction of 253 properties of builders across the state to refund flat buyers, who were yet to receive possession because the developers had no funds to complete the projects.

All of these were cases where the buyers saw the real estate value of their flats plummeting and wanted to take advantage of the RERA provisions that allowed them to exit the projects with their investment, along with the interest amounts.

The MahaRERA officials said buyers trying to exit the projects would derail the entire process and told the allottees to get together and “combat the situation”.

Source: https://realty.economictimes.indiatimes.com/news/industry/maharera-to-soon-have-27-conciliation-panels-for-timely-project-completion/70812946

UP-RERA issues notice to Ghaziabad development body in housing scheme case

Ghaziabad

The Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) has issued a notice to the Ghaziabad Development Authority (GDA) over its failure to appear before the regulator in a case related to the Indirapuram housing scheme for the economically weaker section.

The GDA, however, says the scheme doesn’t come under Rera’s purview.

The case was filed at the Greater Noida bench of UP-Rera by 60-year-old Ghaziabad resident Raj Prakash Tyagi, who has not yet got the possession of his EWS house that he was allotted 30 years ago by the GDA. The Rera bench issued five notices to GDA between February and June this year, asking its representative to appear before the regulator.

The bench has now threatened to pass ex-parte order on the basis of available documents and facts, in case GDA officials do not appear and clarify their stand, sources told TOI.

As per RERA rules, all development agencies and private builders are required to update their projects so that they can be accessed easily by the buyers and the status of the projects are in the public domain.

However, GDA chief engineer VN Singh said the EWS Indirapuram scheme was launched in 1990 and completed by 2001. “So, it does not come under Rera. The agency cannot expect the department to register the project that was completed 18 years ago. We have already submitted this reply, but despite that, the notice has been issued.”

Source: https://realty.economictimes.indiatimes.com/news/regulatory/up-rera-issues-notice-to-ghaziabad-development-body-in-housing-scheme-case/70763231

RERA should be amended to plug loopholes: H-RERA Chairman

New Delhi

The realty law RERA should be amended to plug loopholes and make it more effective for the interest of all stakeholders, according to regulators.

In an event organised by industrychamber PHDCCI, Gurugram RERA Chairman K K Khandelwal asked India Inc to make suggestions to the government for necessary amendments to RERA Act to make it dispassionately objective for both builders and home buyers.

According to Khandelwal, the existing stipulations and provisions of RERA Act have many loopholes that need to be plugged in the interest of all the stakeholders, PHDCCI said in a statement.

“In its current format, several sections and sub-sections including clauses and sub-clauses of the RERA Act are contradictory and therefore, open for many legal interpretations as well interpretations of real estate regulatory authorities of different States and therefore, amendment to them are called for to make sure that all stakeholders in the real estate and construction sector get a fair deal and the intended growth of the sector is ensured,” Khandelwal was quoted as saying.

Balvinder Kumar, Member, UP RERA informed that the UP RERA has so far received 70,000 complaints from various home buyers against builders in the state that have defaulted in their delivery commitments.

Of which 10,100 complaints have been addressed.

Source: https://realty.economictimes.indiatimes.com/news/industry/rera-should-be-amended-to-plug-loopholes-h-rera-chairman/70763340

MahaRERA says MoU proof enough for ownership

Mumbai

Though two homebuyers had only a Memorandum of Understanding (MoU) as evidence that they invested in a flat. The Maharashtra Real Estate Regulatory Authority (MahaRERA) has ruled that it is proof enough of ownership and directed the developer to refund Rs 82.95 lakh with 10.75 per cent interest from 2012.

According to the complaint, Krishna and Veena Agarwal had booked flat in a project in 2012 and paid Rs 82.95 lakh out of the flat cost of Rs 89.41 lakh.

The complaint said the developer had assured possession in 2016, but in 2017, unilaterally changed the possession date to July 31, 2022.

The complaint also said that on the MahaRERA portal, the developer has mentioned that 40 floors are proposed, 28 are completed, but the Commencement Certificate is only till 27th floor; therefore, the Agarwals want to withdraw from the project and seek refund of their investment with interest.

During the hearings, the developer claimed that the Agarwals were not homebuyers but investors and that the MoU was not registered.

MahaRERA member Madhav Kulkarni observed that the Appellate Tribunal had held that even in the absence of a registered agreement, such complaints are maintainable.

Stating that the developer should not have accepted such a huge amount when the project was not progressing as per schedule, Kulkarni held that the builder had failed to deliver possession of the flat as per agreement and directed the company to refund the paid amount from the date of payment till final realisation.

Source: https://realty.economictimes.indiatimes.com/news/industry/maharera-says-mou-proof-enough-for-ownership/71002224