New Delhi: Real estate developers and homebuyers will likely get relief from paying penalties for failing to comply with the Real Estate (Regulation and Development) Act in view of the nationwide lockdown, two senior housing ministry officials told ThePrint.
The union housing and urban affairs ministry intends to invoke the “force majeure” clause of the realty law and ask state regulators to exempt developers and homebuyers for violations occurring during the lockdown.
“The regulators could be asked to extend the timeline given by real estate developers to complete a project, so that they do not pay penalty for defaulting. Similarly, homebuyers could also get an extension for paying whatever amount is due to the developer,” said a second ministry official who did not want to be named.
What are the penalties
Under the real estate law, developers are liable to a fine if they default on project completion timelines. They also have to pay a fine equal to 10 per cent of the project’s cost if they fail to register their ongoing projects with the real estate regulatory authority (RERA). Similarly, homebuyers are also liable for not paying dues owed to the developer.
The ministry is presently consulting all stakeholders, including real estate regulators, developers and homebuyers, to see if the lockdown period could be treated as a zero period and payments of due postponed to a later date.
“A final decision on what should be the duration of the extension, one month or more than that, will be taken soon,” said the second official.
Regulators in states such as Uttar Pradesh, Gujarat, Maharashtra and Tamil Nadu have already granted an extension to both developers and home buyers.
“As of now, we have given a three-month extension to developers for meeting their project completion timelines while the homebuyers have been given the same extension to make the payments due to developers. We have not decided as yet if the three month-extension should be increased further,” Uttar Pradesh real estate regulator Rajive Kumar told ThePrint.
The nationwide lockdown, imposed on 25 March to contain the spread of coronavirus has badly impacted the real estate sector and construction businesses. Although restriction on construction has now been lifted, the sector is yet to pick up pace as a majority of labourers, who comes from villages in others states, moved back when the lockdown began.
Housing minister Hardeep Singh Puri had on 29 April held a meeting of different stakeholders in the Central Advisory Council of RERA to discuss the matter.
“We shall consider their demand for invoking ‘force majeure’ clause under RERA & will soon announce measures to save the interest of home buyers & protect the sector from adverse impact,” Puri tweeted later.
We shall consider their demand for invoking ‘force majeure’ clause under RERA & will soon announce measures to save the interest of home buyers & protect the sector from adverse impact.
— Hardeep Singh Puri (@HardeepSPuri) April 29, 2020