Real Estate

PMO to look into realty crisis, protect buyers’ interest

Our Bureau Mumbai | Updated on June 24, 2020 Published on June 24, 2020

The PM’s office was responding to a petition filed by Mumbai-based Samachar Foundation

The Prime Minister’s Office (PMO) will look into the issues faced by the developer community as well as protect home-buyers’ interests, as delays in completion of projects rise.

The PMO said it will “ensure that projects do not get stalled due to disruptions caused by the Covid-19 pandemic” and flats and homes will be delivered to the buyers, albeit with some delay.

The PMO was responding to a petition filed by a Mumbai-based NGO, Samachar Foundation, seeking its intervention into the real-estate crisis.

The Real Estate Regulatory Authority (RERA) has extended the deadline for completion of projects by six months in 23 States, and by nine months in one State. The step was taken to protect the interests of home-buyers in view of the disruption caused by the Covid-19 pandemic, it said.

The PMO letter, signed by Deputy Secretary Akhil Saxena, said “appropriate action will be taken” on the requests regarding one-time debt restructuring, reduction of home loan interest rate to 5 per cent and GST input tax credit.

These assurances are “significant as they comes close on the heels of Finance Minister Nirmala Sitharaman’s promise that she would take a open and fresh look” into the developers’ problems, said a spokesperson for Samachar Foundation.

High costs

Meanwhile, realty players have ruled out the possibility of reducing prices due to high cost of funding and inputs, apart from rising hidden costs such as ready reckoner rates.

With commercial banks continuing to give negative weightage to real-estate developers, the latter are forced to opt for high-rate-of-interest financing from NBFCs (non-banking financial companies), the foundation, which conducted a survey, said.

“We need to understand that developers today are largely building affordable and mid-segment homes wherein profit margins are already significantly lower,” Prashant Thakur, Director and Head - Research, ANAROCK Property Consultants, was quoted in the survey.

Developers body CREDAI MCHI has formed an MMR Action Committee to highlight the issues faced by the industry and plead with the government for one-time debt restructuring and ensure that the benefits of repo rate cut are passed on to the end-consumer.

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Published on June 24, 2020
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