UP-RERA Directs Defaulting Developers To Pay Penalty
While sales picked up by 59 per cent over the last year, the Noida micro-market still reels under the tremendous pressure of unsold inventory estimated to be of 32 months according to data available with PropTiger. The basic selling price has also marginally dipped and stands at an average of Rs 3,870 per sqf as of now.
Developers are also cautious. Resultantly, new launches decreased by 33 per cent which will ensure that the burden of sales would not worsen the market dynamics. Noida homebuyers, however, are lining up at the Uttar Pradesh Regulatory Authority’s (UP-RERA) office to report instances of delayed, abandoned projects.
Hundreds of cases are being taken up by the authority. Preliminary investigations have revealed that in many cases, the builders may have diverted the funds. Since September this year, the Greater Noida Bench of the RERA has heard 600 cases while the Lucknow Bench has heard 500 cases.
The UP-RERA has directed many builders to pay penalty interest for undue delays. “Since the buyers are not at fault in paying for a flat then they have a right to an adequate compensation,” said Balvinder Kumar, member, UP-RERA. The penalty is decided by the authority and varies from case-to-case.
Early this month, in a first, homebuyers of a Greater Noida project located in Sector 137 were now given the opportunity to complete the project. The Greater Noida Bench of UP-RERA had asked 700 homebuyers of Subhkamna Tech Home to come up with a financial plan for the project that was abandoned by the builder due to lack of funds. The project that was slated for completion and possession in 2014, has not been completed after a four-year delay. Buyers have paid up to 90-95 per cent of the cost of flats, estimated to be Rs 200 crore. The builder also owes Rs 80 crore to the Noida Authority which will also be considered during the resolution.
Affected homebuyers will need to make their own financial plan to complete the project given that over 60 per cent homebuyers are in unison. Thereafter, UP-RERA will have to approve the plan, which will then need approval of the financial consultants of the Noida Authority. After the said approvals, the buyers would be allowed to complete the project, Balwinder Singh, a member of the state’s regulatory body confirmed.
Not an easy road
To begin with, the homebuyers have formed a team to write a proposal. The buyers are mulling to pool in funds and engage an external contractor. The estimated time period to finish the project is six months as seven towers in the project are 70-80 per cent complete. Consultant firm, Currie & Brown have been roped in to asses the viability of such a resolution.
“We have written to the Greater Noida authority to explore the possibility of taking over the project. The authority can sell the vacant land and develop the project through a co-developer where Shubhkamna is building a township,” Kumar said to Hindustan Times.
Meanwhile, the UP-RERA is also grappling with a case put forth by 22 buyers of a mixed-use project by the name Airwil Intellicity. Affected homebuyers are waiting for the authority’s decision, which if not favourable, they would move the Allahabad High Court. The project that was slated for possession in 2017 is delayed and despite refund recovery note from the UP-RERA, the builder’s cheque was not honoured by the bank. The authority will now question the management at Airwil.
Another case that came up last week was that of Earth Infrastructure and Earth Iconic Infratsructure and the UP RERA has asked 137 homebuyers to file their claims with the resolution professional.
The authority says that given that 80 per cent of all cases are from Noida and Greater Noida, the Greater Noida bench is working five days a week.