News: Haryana extends relief to real estate by declaring April, May a Zero Period-17-06-2021
The Haryana government has taken a prudent step by granting relief on interest and other time-bound compliances for April and May, which will help the realty sector to bounce back and return to normalcy soon.
As a part of recovery plan for the beleaguered real estate sector, the Haryana Cabinet has granted relief to developers by declaring April and May a zero-interest period. During Zero Period, developers (as well as entrepreneurs) will get relief on interest payment of renewal fee of license on delayed period, submission of fresh bank guarantee on account of grant of license and interest/penal interest on payment of installment of external development works (EDC), state infrastructure development charges (SIDC) during this period, letter of intent/ permissions/ building plan approval/ extension of CLU permission and licenses and renewal of licenses, and related compliances.
There is a huge aggregate demand for housing in India driven by the overall rise in middle-income households, lower interest rates, and favorable socio-economic dividends. Yet the long-term bullishness of one of the largest industries in India is contradicted by the current on-ground realities. Demand is muted and most of the developers are suffering from poor liquidity positions. Amid such intensifying crisis, policy support in the forms of reliefs, discounts and subsidies is believed to be a welcome step.
Commenting on the same, Ankit Kansal, Founder & MD, 360 Realtors, said, “The Haryana government has taken a prudent step by granting relief on interest and other time-bound compliances for April and May. This will help the industry, which is floundering in the face of the crisis, to bounce back and return to normalcy soon. The developers can pass on the relief to the allottees and thereby build resilience across the value chain. Such models, although rare, can spur other states to adopt them, as a part of their overall relief & resilience-building action place.”
Meanwhile, “the government should also look into other crucial areas such as price control of raw materials (cement & steel), direct policy supports such as a cut in stamp duty, and special investment windows for real estate,” added Kansal.
Nayan Raheja, Executive Director, Raheja Developers, said, “The penal interest will be eliminated under the zero-period policy, allowing builders to restructure their finances. In many circumstances, developers will pass on the equivalent benefits to their allottees, ensuring that end-user sufferings are also eased to some degree. Labour across sites had become demobilized and remobilized losing at least 3 months of work time in the process. RERA should also provide additional relief on completion dates of projects.”
“The decision of considering the April-May 2021 period as Zero Period is in line with the relief measures taken by government to revive the economy. This will boost confidence of both developers and buyers, in terms of relief in interest on pending dues, and for time-bound agreements. The developers further pass on the benefits to buyers, so that the complications faced by them can be further eased,” said Santosh Agarwal, CFO and Executive Director, AlphaCorp.
Developers say the step taken by the Haryana government need to be replicated in other regions of the country too for smooth functioning of the realty sector.
Kushagr Ansal, Director, Ansal Housing & President, CREDAI Haryana, said, “Though this time lockdown was not as severe as last year’s, the challenges were still there. Various real estate bodies have already come together to voice their concern over the likely delays and funding issues. The step taken by the Haryana government should be replicated in other regions also to ensure that the realty sector can function smoothly.”
