Expecting relief in Union Budget 2019-20, home buyers are empty hand but after verdict of Amrapali, stress fund is the only hope for all stuck projects.

Incomplete housing project of need stress fund
Such incomplete project need stress fund

Land allotted by state body, projects approved by authority and funded by banks but a dream project became symbol of greed, mismanagement, biased decisions and unsolved circumstances. Unfortunately, for 3 lakh home buyers home is only a dream even after 10-15 years of buying it and now branding failure of govt., state authorities and bank builder nexus. For them stress fund from Govt. is only hope!

Home buyers of Unitech, Amrapali, Jaypee, 3Cs, Earth and many other housing projects are protesting from site to authority and Parliament for their home. They are demanding stress fund to construct their home. After hearing cases of real estate projects almost 2.5-3 years, SC is also demanding involvement and a uniform policy from govt. to save their life savings. 

In present scenario, there are 3 kinds of developer in sector-

Category 1- Those who are honest, have less liabilities and want to construct but stuck due to lack of funds like; Gayatri, JNC, Patel etc.

Category 2- Those tossed out due to heavy liabilities and financial misconduct. Have semi developed projects like; Amrapali, Maple etc.

Category 3- Those who collected money and don’t have any intention to develop projects like; Earth, Ekdant, Unnati etc.  

Abandoned projects
Abandoned project are common in city

For above 3 categories, remedy can’t be same but end of the day, stress fund is necessary to meet the final solution i.e; home because buyer’s trust and future of sector. Category 3 is the most serious than rest of the 2 and for this, possible solutions could be;

Condition 1- Centre and state govt. jointly release stress fund only for completion and possession of incomplete housing projects. Priority could be given to those which are in final stage or 70-80% completed. Govt. should suggest home buyers to shift from other incomplete towers to these having vacant or unsold units.  

Banks should be instructed to adjust interest of at least 5 years in principal amount. Rest of the land and inventories should be sold as fresh properties to cover up investment and earn profit.   

Condition 2- State authorities should identify such developers who have limited debt and liabilities or no bank loan. These projects can be revived easily by providing fresh funds. Here RERA and state govt. have to play strong role for fresh bank funding because banks are more hesitant right now.

In fact, developer should be offered to sell or surrender vacant land bank and construct society at low FAR to handover projects early.

Condition 3- Identify home buyers of all stuck projects where developer has no intention to develop anymore. After cancelling land deeds, all home buyers should be shifted to one or two such housing societies that have capacity to accommodate all. So govt. authorities may focus to infuse stress fund in particular projects and deliver only those rather than constructing all.

Now this will cater end objective of all stuck home buyers. On the other hand govt. will get prime land bank open for re-auction to generate funds and adjust their loss.  

Condition 4- Authority should be rational to waive off interest and compound interest of penalty on the projects to make them practically viable for builder who are willing to construct.

Such settlement policies can bring back projects on track because everything is managed by the authority from allotment to penalty to cancellation etc. So practically adjusting on principal can be possible too.

Hariom Dixit- Director, Gayatri Group says, “funds are real worry for developers who still have enthusiasm to deliver project and only govt. must come forward to support them. It is time to think beyond limitation to begin construction and delivery of projects. Govt. should begin with developers having zero debt because these projects need limited funds for construction. Fresh funds from financial institutions under supervision of RERA can restart projects. This can save approximately 40% of projects in NCR.”

Saurav Paruthi- MD, Param Homes says, “home buyers are suffering due to delay delivery. It is extremely painful to pay EMI and rent together. Stopping EMI may create financial turbulence for banks and lending institutions. Only completion and delivery is the right way to solve this issue. Govt. should release fund to construct some part or phases and ensure home.”

Suresh Garg, CMD- Nirala World says, “it is big mistake to count them 3 lakh. It is family and normally they are 12-15 lakh individuals who are badly affected due to this crisis. And these are live examples of financial and mental trauma after an investment went wrong without their fault. This is a wakeup call for govt. to ensure homes of such people, re structure properties of defaulters, auction of unsold to minimize loss and control negativity spreading among mass.”

Ministry of Finance hold round table meeting with NAREDCO and CREDAI to find out possible solutions for crisis in real estate. In coming time status of stress fund will be more clear.