In order to safeguard the interests of some 3 lakh stranded homebuyers awaiting possession of flats in Noida and Greater Noida, the Centre has proposed to the Supreme Court that government-owned NBCC take over all unfinished projects and complete construction.
The Centre’s suggestion came in the backdrop of various housing projects in NCR being stalled due to real estate companies facing financial crunch and insolvency proceedings and homebuyers being worst sufferers because they need to pay interest on home loans without relief in near future.
The government recommended RBI change its guidelines and allow banks to provide last mile funding to complete projects at an advanced stage of construction. RBI in its February circular said any loan given to stalled projects would be considered as a non-performing asset and restricted fresh funds.
Though SC has taken upon itself the task of protecting the interests of over 46,000 homebuyers in Amrapali group, directing the National Building Construction Corporation to take over stuck projects, there remain more than 2.5 lakh investors who have been taken for a ride by other builders.
To redress the woes of buyers and to ensure cash flow for construction of stalled projects, the UP government had set up a high-powered committee headed by the Union housing secretary to consult all stakeholders and suggest measures to revive the sector. Filing the report before a bench of Justices Arun Mishra and U U Lalit, which is hearing the Amrapali case, the Centre said around three lakh homebuyers are affected due to non-delivery of flats and a multi-pronged approach is needed to resolve the crisis in the NCR.
The report held real estate companies responsible for the crisis as they diverted homebuyers’ funds to expand their business. It said some builders sold their projects at prices lower than the cost of construction due to stiff competition which made them economically unviable and suggested that NBCC be roped in to complete the projects. “SC has directed that NBCC has to conduct survey and furnish the proposal for stalled projects of Amrapali group. Similarly, it is recommended that NBCC may conduct a survey of stalled projects of other developers in Noida and Greater Noida...the authorities shall provide their full assistance,” the report said.
The report said in addition to Amrapali, there are 10,000 homebuyers in Three C group of companies, 30,000 in Jaypee and 5,923 in Unitech who are affected due to non-delivery of flats.
“Many projects are almost complete but cannot be handed over to the homebuyers because of some minor pending construction work. At this stage, the investors do not put in their money as there is no clarity on return of their invested money. Therefore in absence of last mile funding, projects get stuck. Therefore it is recommended that the last mile funding for projects may be permitted on the basis of ‘Last-In First Out’, where the investor who puts in money at the last stage to complete the stalled projects exits first,” the report said.