Updated: August 12, 2019 4:29:42 am
The government will step in to address issues impacting confidence in the real estate sector, including the possible setting up of a stress fund to deal with stalled projects. Industry bodies and homebuyers met Finance Minister Nirmala Sitharaman Sunday to flag their concerns regarding the ongoing liquidity crunch, demand slowdown and problem of stalled projects.
The Finance Minister on Sunday had two separate meetings — the first with the two apex realtors’ industry bodies CREDAI and NAREDCO, and the second with homebuyer associations, to discuss the issues concerning the real estate sector and steps to be taken to strengthen the industry.
Housing and Urban Affairs Minister Hardeep Singh Puri, Minister of State for Finance Anurag Thakur and top officials from the departments of economic affairs, revenue, housing, Central Board of Direct Taxes, Corporate Affairs and RERA also attended the meetings.
Representatives of CREDAI and NAREDCO, who attended the meeting said that there is “unrest” in the sector because of liquidity crunch and poor sales, and demanded that banks and NBFCs should be encouraged to fund projects. They also expressed concern that the situation could become worse during the coming festival season, when generally demand is higher.
There would be a separate high level meeting, under the chairmanship of the Cabinet Secretary, in the next few weeks to discuss setting up of a stress fund to deal with stalled projects and bail out lakhs of stuck homebuyers, sources added.
Briefing the media after the meeting, Puri said: “Lot of useful discussions happened at the meeting with the real estate industry. We looked at a number of issues, clarified a number of issues and the government will be addressing these issues in the days to come.” With these discussions, he said, the process of finding solutions to some of the problems that have affected the real estate industry has started.
“Whatever problems are there of the homebuyers, stalled projects etc, we are exploring ways to move forward on this. Many homebuyers have moved the Supreme Court and there are judgements too. So it’s a very complicated arena. But given the goodwill within the government, amongst the homebuyers and industry, whatever problems are there we will find solutions for them,” Puri asserted. When asked about creation of a stress fund, he said several issues were discussed, but declined to give details.
Festive rush could add to real estate sector’s woes
Mirroring the downturn in the broader economy, the “unrest” in the real estate sector is because of liquidity crunch and poor sales, alongside the problem of huge inventory. There are concerns that the situation could worsen during the coming festive season, when generally demand is higher.
CREDAI chairman Jaxay Shah said, “We had a great positive, patient hearing from finance minister. Government is cognisant about the matter affecting real estate industry including the liquidity crunch and taxation issues. We are very hopeful to have some good and tangible results in coming weeks.” CREDAI president Satish Magar said the government wanted to know about all the issues affecting the industry.
NAREDCO president Niranjan Hiranandani said, “As you know, the real estate industry is going through a crisis, as is rest of the whole economy. So we are very glad that the Finance Minister and Housing Minister met us on a Sunday morning to understand the situation.”
“The positive part is that the government understood that we need to take this thing forward and we need to do it quickly,” he further said.
Asked about the Centre’s response, Hiranandani said, “No response in terms of what actions the government wants to take, we are not aware and nor was anything committed on behalf of the government.”
NAREDCO vice chairman Parveen Jain said the issue of stalled projects in the National Capital Region was also discussed on Sunday. To boost demand and address liquidity issues, the industry bodies suggested various measures, including reduction of interest rates on home loans to 7 per cent and withdrawal of the recent National Housing Board (NHB) circular prohibiting subvention scheme — where the interest is paid by the developer for certain fixed time.
They also said the real estate regulators established under the RERA, should be the first point of grievance redressal for homebuyers. Meanwhile, homebuyers body Forum for Peoples’ Collective Efforts (FPCE) President Abhay Upadhyay said five lakh customers are stuck across the country due to delayed projects.
He demanded creation of a Rs 10,000 crore stress fund to complete such projects and provide relief to these homebuyers.
Homebuyers of Jaypee Group told the Finance Minister that projects are not getting completed despite promoters having huge land bank along with assets like the Yamuna Expressway project. —WITH PTI
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