Several developers in the National Capital Region have requested the Real Estate Regulatory Authority (RERA) of UP, Haryana and Delhi to delay recovery notices issued to builders by at least six months, in light of the Covid-19 crisis that has crippled the sector.
These builders were ordered before the clamping of the lockdown to pay compensation to homebuyers for project delays.
“We have requested that no adverse order of refund or recovery be issued for a minimum period of six months. Cash flows of our industry are badly impacted in the present scenario and no customer is able to pay the due instalments,” said RK Arora, the president of the Uttar Pradesh chapter of the National Real Estate Development Council.
The Maharashtra Real Estate Regulatory Authority had extended the validity of registration of projects by three months, effectively pushing back the deadline to complete the projects.
However, developers in the NCR are not keen for such an extension, and have instead sought relief in delaying payment of compensation to homebuyers and more time to file quarterly update on projects.
With mass exodus of labourers, developers fear mobilising construction workers to resume work would bea major challenge.
“It is impossible for the promoters to comply with the penalty orders. Considering the situation wherein the financial markets have collapsed, it will take a long time to get the required funds. Hence penalty should be reviewed and orders be set aside,” Arora told ET.
UP-RERA chairperson Rajiv Kumar told ET that it had held initial talks with developers and a final decision on what relief to offer would be taken soon.
“Expert opinion is that the Covid-19 impact will be long-lasting and will redefine the marketplace for the near future. We have requested to declare this lockdown as force majeure and extend the project completion period by a minimum 9-12 months. This is because once the lockdown is lifted, which is yet uncertain, it will take a minimum six months for us to remobilise the finances and labourers who in most of the cases have migrated to the hometowns,” said Gaurav Gupta, the president of the Confederation of Real Estate Developers Association of India, NCR-Ghaziabad, which has analysed the impact on business for the next year.
Gupta said receipts from sales already completed was almost zero since March 20 and that this trend was expected to continue as a state of fear was prevalent and people were focussing on day-to-day needs.
Experts said much of the direct impact had been caused by the liquidity crunch the sector had been facing for the last couple of years and that the lockdown had exacerbated it. “The supply chain for necessary raw materials for construction activity, like cement and steel, simply does not exist anymore. This has, therefore, had a cascading effect on daily wagers whose principal source of employment comes from the real estate sector. Therefore, a delay in delivery of ongoing projects, both housing and commercial, is expected and timelines provided to RERA will change,” Athena Legal partner Simranjeet Singh said.