Committee to review Real estate issues

As per the information, the Amitabh Kant committee, which was tasked by the Government with suggesting ways to revive stalled real estate projects, acknowledged the financial stress of real estate developers but recommended no direct support.

• The government has formed a committee on March 31, to look into stalled real estate projects and suggest ways to complete them.
• The decision to form a committee had been taken by the Central Advisory Council (CAC) formed under the Real Estate (Regulation and Development) Act, 2016 (RERA) on April 12 last year.

About the Committee:

• It was a 14-member committee, and chaired by former NITI Aayog CEO Amitabh Kant.
• Objective: According to the order, the panel is supposed to deliberate on the issues of legacy of the stalled projects and recommend ways to complete their hand over to homebuyers in a time-bound manner.
• It submitted its report to Housing and Urban Affairs Minister.

Key observations of the committee:

• It cited the IBA’s estimation that;
• 12 lakh dwelling units of Rs.4.08 lakh crore were stressed
• About 40 lakh (44%) of these were in the National Capital Region
• Another 21% of the units were in the Mumbai Metropolitan Region
• The report has essentially suggested that all stakeholders — developers, financiers and land authorities have to make the stalled projects financially viable.
• The report provides a generalised framework.

What are the recommendations of the committee?

• Mandatory registration- All projects with the following criteria must be registered with State Real Estate Regulatory Authority (RERA).
  • Where the land is over 500 square metres or
  • The number of apartments to be constructed are more than 8
• De-link registration- The committee advocated to de-link the grant of registration or sub-lease by the land authorities to the homebuyers from the recovery of dues from developers.
  • This would benefit about 1 lakh homebuyers for the immediate registration and execution of subleases in favour of homebuyers.
• Granting certificates- RERAs should identify projects where no-objection and completion certificates have not been issued.
  • It should accelerate the process to grant certificates, irrespective of the developers paying their dues to the authorities.
• Rehabilitation package- It is the role of the State governments to set up a rehabilitation package to get the stalled projects run again.
• Conditions;
  • The developers should commit to complete the projects in 3 years.
  • It includes Zero Period for 2 years starting with the onset of COVID pandemic.
  • Developers would be allowed to get a co-developer on board to complete the work.
• Partial surrender policy- The developers can give back some of the unused lands to the authority in exchange for a waiver on the dues for that land.
• Outstanding payments- The RERA can directly collect these outstanding payments from homebuyers, bypassing the builders.
• Occupancy- It suggests that occupancy or possession of substantially completed projects should be granted within the next 30 days.
• Financial support-
  • Bring stalled projects under the purview of priority sector financing.
  • Ministry of Housing and Urban Affairs should formulate a scheme.
  • The government should consider offering subsidized interest rates or a guarantee scheme similar to those available in the MSME sector.
  • Improve the Internal Rate of Return of the projects in order to attract funding.
  • Last resort- Judicial interventions, like the use of the Insolvency and Bankruptcy Code, should be the last resort.
  • Project viability- All the stakeholders (developers, financiers, land authorities etc.,) would have to take a haircut or accept less than what is due to them.