The Uttar Pradesh government on Tuesday asked the three industrial development authorities in Gautam Buddh Nagar to reduce interest rates on land dues in view of the COVID-19 pandemic. The decision was conveyed to the Noida Authority, the Greater Noida Authority (GNIDA) and the Yamuna Expressway Authority (YEIDA) in an official letter by Alok Kumar, Principal Secretary, Industries and Infrastructure Development, UP.
Developers and real estate bodies like Naredco and Credai hailed the move, saying it will make projects financially more viable and significantly benefit home buyers. "There will be no interest for delay on land dues which were to be cleared between March 22 and June 30 if payment is made by June 30," according to the letter.
"Those who deposit their dues scheduled between March 22 and June 30, by September 30 would be charged a simple interest (SI). This SI would be counted from March 22 till the date of payment," the letter stated. On all the dues paid between July 1 and September 30, the concerned authority will charge simple interest, it said. "If these dues are not cleared by September 30, then default interest will be applicable on entire period of delay," it added.
The letter also made it clear that date of payment for land dues scheduled in future will not be changed, and they will be "as per lease deed". "In the first round relief, the government has allowed Noida Authority, GNIDA and YEIDA to charge interest on balance outstanding at MCLR (marginal cost of fund-based lending rate) +1 per cent. It is a big relief to developers which will help us to deliver projects fast to home buyers," Naredco UP President and Supertech Chairman R K Arora said.
Realtor's body CREDAI's NCR unit president Pankaj Bajaj said for allotments to builders, the authority rate of interest on instalment was practically coming to more than 15 per annum. "Due to the slowdown in the market in the last four years, this rate of interest made most projects in Noida and Greater Noida financially unviable. If projects become sick, not only is homebuyer's investment at risk but even the Authority's paper receivables become doubtful," he said.
He added that CREDAI had been requesting for making rate of interest reasonable and linking it to MCLR. "The revised rate is around 9 per cent per annum. This makes a material difference to the economic viability of projects in this region. Ultimately it benefits the homebuyer by making the projects more healthy and assuring delivery, Bajaj said.
Ashish Bhutani, CEO, Bhutani Infra, said the step has come in right course of time, the moratoriums for delivery was a big relief and now with interest rates getting reduced this will be another relief to thousand of property owners. "The interest deferment will ease out the cash flow and developers would be able to focus on delivery of projects," Bhutani said.
Manoj Gaur, MD, Gaurs Group and Chairman of Credai's Affordable Housing Committee said the move will provide much needed help at this moment of crisis for industry as a whole. "This will reduce the burden on the developers, the ultimate beneficiary will be home buyers. The move will definitely give a relief to the affected developers," Gaur said.
Ashok Gupta, CMD, Ajnara India said the decision will ease out some burden. "Developers are already busy going to the drawing board to make marketing strategies and other operational nuances in post COVID-19 scenario. This decision of authority has come as a relief," he added.
Vikas Bhasin, MD, SAYA Homes said that the lockdown waiver of interest rate on authority dues will help the developers manage funds for activities that can expedite the sale process. "We wish that other measures too will come the sector's way to ease out the burden," Bhasin said.
Dhiraj Jain, Director, Mahagun Group said he hoped the state government would also come out with other measures, including a relief package, for the sector. "Real estate is an important part of the country's economy and anything for this sector will ultimately help in quick economic recovery," he said.