29 - 09 - 2021

CREDAI Bengal Daily News Update | 29.09.21

Builder has to compensate RWA for handing over unfinished

project: SC

The long legal battle reflects issues faced by residents in such societies across the country

and will be a boost for home buyers, even though more recent state RERA laws cover some

of the aspects relating to defaults on promised facilities.

Builders cannot get away by handing over maintenance and administration of a housing society

to the Residents Welfare Association if the project remains unfinished without all infrastructure

and facilities promised to home buyers and will need to compensate RWAs, the Supreme

Court said.

Almost 18 years after a builder handed over a housing project in Noida to the residents'

association, a bench of Justices Hemant Gupta and V Ramasubramanian directed company

Padmini Infrastructure to pay Rs 60 lakh to the Royal Garden Resident Welfare Association for

not building a water softening plant, a second health club, a swimming pool in addition to putting

in place a fire fighting system.

The long legal battle reflects issues faced by residents in such societies across the country and

will be a boost for home buyers, even though more recent state RERA laws cover some of the

aspects relating to defaults on promised facilities. Such disputes between RWAs and builders,

some going back several years, continue to clog courts and consumer forums.

The real estate company constructed the housing project with 282 apartments and possession was

given from 1998-2001. The purchasers formed a Residents Welfare Association and got it

registered in 2003 under the Societies Registration Act. The RWA entered into an agreement on

November 2003 with the builder for taking over maintenance of the apartment complex.

As the builder did not fulfil promises made in the agreement, the RWA approached The National

Consumer Disputes Redressal Commission (NCDRC),which appointed a local commissioner to

visit the site and file a report. On the basis of the report, NCDRC allowed the plea of the

association.

The company thereafter moved apex court which had in an interim order in 2010 stayed the order

of consumer commission but had directed the company to deposit Rs 60 lakh in its registry.

A decade after entertaining the petition, the court directed that the sum be handed over the

association and brought the 18 years old legal fight to an end. The court turned down the plea of

the company that the association was barred by limitation to raise the grievances and passed the

Newspaper/ Online ET Realty (Online)

Date September 29, 2021

Link https://realty.economictimes.indiatimes.com/news/regulatory/builder-has-to-compensate-rwa-for-handing-over-unfinished-project-sc/86603436

order by accepting the report of local commissioner.

Observing that the association was handed over maintenance of the housing society 18 years ago.

the court said it might not not be possible to compel the builder to make those facilities or systems

fully operational now and interests of justice will be met if the order of the National Commission

is modified in such a manner that the complainant Association shall receive in full and final

settlement.

"The complainant shall be entitled to all told monetary compensation in a sum of Rs. 60

lakhs, now lying in deposit with the Registry of this court, together with the interest accrued

thereon, in lieu of the reliefs sought in prayer of the complaint. The opposite party(builder)

shall, within two weeks, remove all building material stored by them in the club house in

the basement of Tower Eden and hand over possession of the club house to the

complainant," the bench said.

_____________________________________________________________________________

Home buying has become more affordable in last 8 years:

JLL India

During the current year, household incomes witnessed a sharp increase of 7%-9% (from

the low base of 2020) in the markets under consideration, the report stated.

Home purchase affordability has increased consistently across key Indian cities in the last eight

years — between 2013 and 2018 — according to JLL India’s annual Home Purchase

Affordability Index (JLL HPAI 2021), released on Monday.

During the current year, household incomes witnessed a sharp increase of 7%-9% (from the low

base of 2020) in the markets under consideration, the report stated. At the same time, home prices

remained stagnant in all of India’s prime residential markets except for Hyderabad. Moreover,

mortgage rates continue to trend at their lowest in 15 years, thereby leading to reduced EMIs for

homebuyers, thus having a significant bearing on affordability.

The second Covid-19 wave dented the market following a good recovery curve. However, the

impact was muted when compared to the same period last year. Importantly, lockdown

restrictions across cities are being eased and the vaccination drive is gathering pace. Most of the

changes witnessed in the sector have been structural in nature and demand for homes is only

expected to increase.

According to the JLL HPAI 2021 index, Mumbai (India’s most expensive property market) has

witnessed a significant rise in home affordability index, breaching the affordability threshold of

100 this year. In 2020, Kolkata overtook Hyderabad to become the best market in terms of home

purchase affordability.

The current year is expected to witness Hyderabad surpass the 200-mark on the affordability

index followed closely by Pune.

Newspaper/ Online Financial Express (Online)

Date September 28, 2021

Link https://www.financialexpress.com/industry/home-buying-has-become-more-affordable-in-last-8-yrs/2339164/

The index indicates that an average income earning household in the markets of Hyderabad and

Kolkata has enough income to qualify for a home loan on two 1,000 square feet apartments (or

one 2,000 sq. ft apartment) at the prevailing market price, the report stated.

_____________________________________________________________________

Delivery of stuck realty projects may be delayed further over

procedural snags

In bigger cases, like Unitech’s, there has been little progress in completion of projects. In

Amrapali case, NBCC could not achieve much in terms of construction due to lack of funds.

In Jaypee case, the resolution plan is pending for National Company Law Tribunal (NCLT)

approval.

Home buyers are staring at further delay in delivery of stuck projects as procedural complexities,

lack of consensus among stakeholders and absence of time-bound clearances from authorities

hobble the push toward completion.

Across the country, home buyers and financial institutions have been pinning their hopes on the

dedicated bankruptcy court for resolution and a much-needed push to ensure delivery of over

100,000 such houses, most of which have been stuck for over a decade.

However, despite the Supreme Court appointing new boards or designated authorities to complete

construction of pending projects, they are yet to see much progress due to disagreements amongst

various stakeholders, such as government authorities and secured lenders.

Appointment of resolution professionals and moratorium need to start from reference of

application by financial creditors, experts said.

“Once the committee of creditors approves a plan, then NCLT may focus on compliance of IBC

and rely on commercial wisdom of CoC,” said Rajiv Chandak, Partner, Deloitte India. “Delay in

implementation of admission and resolution is leading to deterioration of assets in the company.

Time taken in CIRP can be shortened dramatically and bring our code further in line with

developed jurisdictions.”

Among the bigger cases, such as Unitech’s, there has been little progress in completion of projects

as the scheme formulated by the new board is facing objections from authorities and secured

lenders on grounds of unfair and arbitrary treatment to them under the plan.

In the Amrapali matter, the court appointed developer NBCC in 2019 to complete the projects,

but it could not achieve much in terms of construction for long owing to lack of funds.

In the Jaypee Infratech case, the corporate insolvency resolution process (CIRP) has been on for

four years and the resolution plan approved by committee of creditors (CoC) under insolvency &

Newspaper/ Online ET Realty (Online)

Date September 29, 2021

Link https://realty.economictimes.indiatimes.com/news/residential/delivery-of-stuck-realty-projects-may-be-delayed-further-over-procedural-snags/86603957

bankruptcy code (IBC) is pending for National Company Law Tribunal (NCLT) approval.

The delay in implementation of the plan also deters bidders who are interested in working on

resolution.

“Average resolution timelines in NCLT have gone to nearly 600 days from the mandatory outer

limit of 270 days. This changes the assumptions, costs, value of assets and liabilities and

regulatory regime for projects, which makes resolution applicants wary of taking it forward. The

limit of 270 days for closure of CIRP process should be sacrosanct for realty projects,” said Amit

Goenka, CEO, Nisus Finance.

According to him, time-bound clearances, including RERA, planning and approval authority need

to be ensured to allow immediate commencement of the projects post resolution. The projects can

be offered discounts in premiums, development charges, FSI costs and approvals, with an option

to offer state government stake in lieu of such discounts.

Two years ago, the Supreme Court removed the management led by the erstwhile promoters

Chandras in Unitech and appointed an independent board of directors. However, in the last two

years, the board could not carry out any activity with respect to completion of houses pending

approval of the scheme before the top court.

This has left home buyers helpless and not knowing where to go now.

“In the last 18 months, post the appointment of a new Unitech board, our Alder Grove project,

which was 6 months away from delivery, has seen no construction activity. The agony of 108

months’ delay has become 126 months now. Home buyers and taxpayers are made to suffer with

no relief on interest cost,” said Aditya Mishra, a finance professional who is awaiting delivery of

a house he bought in a Unitech project. “What justice is being served by making home buyers

bear the entire economic cost of this delay without any definite timelines for delivery of houses.”

In cases like Amrapali, where raising funds for project completion has turned out to be a challenge

for NBCC, part resolution and part liquidation can help.

“Not only in real estate but across sectors, companies have viable and unviable businesses.

Resolution can be provided for viable business and liquidating the unviable ones and redeploying

the assets can be allowed. If you can sell the business in parts as part of CIRP that should also

help in getting liquidity to support completion of projects” Deloitte India’s Chandak said.

Home buyers had bought the houses in these incomplete projects 8-10 years ago and there is still

no visibility of getting possession of their homes.

In the case of Unitech, it is understood that the majority of projects have significant surplus cash

to cater to the needs of not only home buyers in those projects but also all its stakeholders. And

the problem of the few projects that are facing a shortfall can be resolved through sale of

unencumbered assets of the company without disturbing the rights of various stakeholders.

Experts said that the resolution in these cases can only take place when the concerns of each

project are addressed separately, including identifying interested developers and investors who

can take responsibility and also bring requisite expertise and funds to complete the project in

committed timelines and balance interest of creditors of each project.

This way, if the viable projects are auctioned to interested developers against upfront

consideration, it will not only resolve viable projects but also generate funds for companies to

resolve few unviable projects. Ends

________________________________________________________________

Lapsed projects in Maharashtra can be extended after hearing

The authority recently put out a list of 3,371 projects that had expired, and promoters had

not applied for extension and not uploaded Form 4, which is the certificate from the

architect on completion of the project. MahaRERA has 30,668 registered projects of which

7,214 projects have been completed.

Developers unable to get consent from 51% buyers to seek extension to complete lapsed projects

listed by Maharashtra Real Estate Regulatory Authority (MahaRERA) may have an alternative.

They can seek a joint hearing with the authority in the presence of the buyers to consider the

extension with additional conditions, the latest order says.

The authority recently put out a list of 3,371 projects that had expired, and promoters had not

applied for extension and not uploaded Form 4, which is the certificate from the architect on

completion of the project. MahaRERA has 30,668 registered projects of which 7,214 projects

have been completed.

In his order, MahaRERA secretary Vasant Prabhu , said developers listed under the lapsed

projects should follow the procedure and only then upload their Form 4.

The authority is giving builders an opportunity to complete their projects, chairman of the

Maharashtra Society Welfare Association (MSWA) Ramesh Prabhu, told TOI.

He said the allottees must form an association and approach MahaRERA to take over the lapsed

project. The allottees will have possession of the project land by collecting the balance dues or

by contributing the necessary amount, and will be able to complete the project.

“In case there are unsold flats, those may be sold by the association to realise the required funds

to complete the project. If the association needs to spend more than what was agreed, the

complaint to recover the excess contribution with interest may be filed before MahaRERA and it

is possible to recover such an amount,” Prabhu added.

Bombay high court advocate Manjunath Kakkalameli said such an SOP would only work for

genuine developers who wish to complete the project and MahaRERA can allow the lapsesd

project to be completed by extending the completion period.

“The joint hearing is a good move. At least extending the period ensures the interests of both

parties and they can act accordingly,” he said.

Newspaper/ Online ET Realty(Online)

Date September 29, 2021

Link https://realty.economictimes.indiatimes.com/news/industry/lapsed-projects-in-maharashtra-can-be-extended-after-hearing/86603318

State CREDAI president Sunil Furde said many developers had uploaded information in the the

wrong column. “MahaRERA has clarified that if such developers have all the data, it will not be

an issue. A genuine developer will complete the project and it is in the interest of the allottees,”

he said.

The order also said if a promoter does not apply for extension or does not respond, the allottees

can apply to the authority under section 7 which will help them, some citizens who have booked

in lapsed projects, said.

________________________________________________________________

Credai-Nashik to initiate vaccination drive for construction

workers

Credia Nashik unit president Ravi Mahajan said registration for the vaccination drive has

started and on-site vaccination would be conducted with the help of a private hospital.

The Nashik unit of Confederation of Real Estate Developers’ Association of India (Credai) —

the apex body of developers — has decided to carry out vaccination of workers at construction

sites across the city.

Credia Nashik unit president Ravi Mahajan said registration for the vaccination drive has started

and on-site vaccination would be conducted with the help of a private hospital.

According to Mahajan, there are more than 8,000 workers at different construction sites and the

organisation has decided to ensure that all of them get vaccinated at the earliest.

________________________________________________________________

Newspaper/ Online ET Realty (Online)

Date September 28, 2021

Link https://realty.economictimes.indiatimes.com/news/industry/credai-nashik-to-initiate-vaccination-drive-for-construction-workers/86577951

New system in place to check fraudulent property registrations:

Tamil Nadu minister

A new system is in place to check fake registrations. We have made it mandatory for

document writers and advocates preparing papers for registration to affix their photos on

the documents and sign before registration, said registration and commercial taxes minister

P Moorthy.

The Tamil Nadu registration department, under registration and commercial taxes minister P

Moorthy, has taken some bold steps to set right many anomalies, some of which are fraudulent

activities involving government officials. In an interview with Padmini Sivarajah, the minister

talks about his priority is to clean up the system and make it more people-friendly.

Q: What prompted you to bring about changes in the registration department?

Chief minister (M K Stalin) felt that though the registration department handled many sensitive

issues, there was a disconnect between the public and officials. Our first task was to bridge that

gap and do away with middlemen and brokers.

Q:You made sub-registrars move out of their elevated seating arrangement and forced them

to sit on the same level as that of other staff. What is the objective?

Seats of sub-registrars were placed on a pedestal for ages. The practice was in vogue since the

British era. But in modern times, you don’t find such practices even in district collectorates.

Collectors and other senior officials sit at the same level as that of other staff. They stand up and

receive people. It was imperative to have such a people-friendly approach in the sub-registrar

offices also.

Q:What is your most important reform in the department?

Amendment to the Registration Act, 1908, has been the most significant one. It now enables the

inspector general of registration to cancel fake documents. Earlier, the sub-registrar could just

refer it to the court for cancellation. It caused a lot of delay in setting right anomalies and

fraudulent activities. A new system is in place to check fake registrations. We have made it

mandatory for document writers and advocates preparing papers for registration to affix their

photos on the documents and sign before registration.

If it is found that they have registered fake documents, their licence and bar council registration

can be cancelled. Moreover, the officials involved in the fraudulent act could face up to three

Newspaper/ Online ET Realty (Online)

Date September 28, 2021

Link https://realty.economictimes.indiatimes.com/news/industry/new-system-in-place-to-check-fraudulent-property-registrations-tamil-nadu-minister/86578068

years of imprisonment. This is a first in the country. Such measures will help check irregularities

like impersonation and selling the same property to multiple people. Registering land based on

the government prescribed guideline value is also important. If a person wants to obtain a loan

based on the land in question, the price is hiked above the guideline value. All such practices will

get checked now.

Officials, both at higher and lower levels, will have to face action if they are involved in

irregularities. We had reports that large-scale irregularities were taking place in the past. They

will act with caution now.

Q:What is your next big move?

We are in the process of constituting a committee to investigate large-scale property registrations

that have taken place across the state during the previous AIADMK regime.

Q: Is there any link between such transactions and Kodanad burglary?

Only investigations can confirm that.

Q: Is the registration revenue hit hard by Covid-19?

We are hopeful that the trend would change fast.

Q: What are your plans for the commercial taxes department?

Our target is 100% GST compliance. People evading taxes would be brought to book. Officials

helping tax evaders will face action.

________________________________________________________________

High raw material costs mar revival plans of real estate sector in

Kochi

“The construction costs have gone up in two ways — the first being the higher prices of raw

materials, which comes around Rs 350 per sq ft and secondly Rs 500 due to the

unavailability of GST input tax credit. In effect, the per sq ft price have gone up by Rs 850

in Kochi,” Sunil Kumar said.

The real estate players of Kochi are expecting a revival of the sector, as part of the nationwide

sentiment triggered by the slow opening up of the economy, but the sector is also witnessing

rising raw material costs triggered by the pandemic.

“There will be a surge in demand in Kochi too, as what is happening across the country,” Sunil

Kumar, managing director, Asset Homes and executive member, CREDAI-Kochi, said.

“However, the construction cost in Kerala has gone up considerably during the pandemic period

making it unaffordable,” he said.

“The construction costs have gone up in two ways — the first being the higher prices of raw

materials, which comes around Rs 350 per sq ft and secondly Rs 500 due to the unavailability of

GST input tax credit. In effect, the per sq ft price have gone up by Rs 850 in Kochi,” Kumar said.

“A boom might be coming in Kochi too, but the question now is whether the market will be able

to absorb the increase in construction costs,” he added.

“Kochi’s real estate sector relies much on non-resident Keralites (NRKs). Except for the

affordable housing projects, NRKs account for 60% of the overall clientele,” he said. According

to him, this segment will strengthen only if the borders are opened up and air travel becomes

cheaper.

The carpet area prices of real estate properties in Kochi has been increasing steadily over the past

seven years, shows the National Housing Bank (NHB) Residex, the housing price index of the

regulatory body for housing finance companies. Overall, the carpet area prices (at the assessment

prices) in Kochi grew from Rs 4,288 to Rs 6,843 per sq ft, a growth of 60%, over seven years.

And the rental market in Kochi is sitting on a huge stockpile of flats and independent houses,

though there is a modest improvement in the situation. When TOI had contacted M A Aslam of

A Star Realtors, a real estate broking agency, in April, the firm had a list of nearly 1,000 flats

available for occupancy at Kakkanad. And it was only a tip of the iceberg – back then Kochi had

5,000-10,000 flats or houses being vacant. However, after five months, things have started

changing.

Newspaper/ Online ET Realty (Online)

Date September 28, 2021

Link https://realty.economictimes.indiatimes.com/news/industry/high-raw-material-costs-mar-revival-plans-of-real-estate-sector-in-kochi/86577847

“Now we have a list of only 300 flats,” said Aslam citing the fact that people have started slowly

coming back.

________________________________________________________________

www.credaibengalhomes.com on Social Media

Your Home has hearts beating for you. Taking care of your heart health

becomes all the more important hence.

CREDAI Bengal Homes urges everyone to stay active, eat healthy and be

under routine checkups to keep every heart in your home smiling!

#WorldHeartDay.

#CREDAIBengalHomes