29 - 09 - 2021
Transcript of 29 - 09 - 2021
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.
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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.
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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
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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.
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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.
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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.
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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.
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