Developers suggested the creation a stress fund for completion of stalled projects. The proposal was also put forward by home buyers in a separate meeting during the day with the Minister.
Speaking to reporters after the meeting, Niranjan Hiranandani, the President of National Real Estate Development Council (NAREDCO), said that the issue of ways to use stress funds for financing stalled projects was discussed.
Hiranandani pointed out at the meeting that rationalisation of taxes and resolution of the liquidity crisis would be paramount in helping real estate and infrastructure get a boost, in turn enabling these to positively impact the economy in terms of GDP growth and job creation.
Jaxay Shah, President of CREDAI, said that the organisation had suggested the inclusion of financial institutions under the ambit of the Real Estate Regulatory Act (RERA) in order to aid the completion of stalled projects.
Shah said that the Finance Minister, Minister of State for Finance Anurag Thakur and Hardeep Singh Puri, the Minister for Housing and Urban Affairs gavr a patient hearing and also suggested steps for reviving the sector.
“The meeting being held on Sunday morning indicates the sense of earnestness and urgency. On behalf of CREDAI, we hope to have succeeded in highlighting the urgency to ease the liquidity constraint in the interest of timely delivery to home buyers. CREDAI also argued in favour of RERA being given due recognition in resolution of legacy issues,” he said.
The meeting also explored measures to promote rental housing in the country.
In the meeting of the home buyers with the Finance Minister, the issues faced by them were discussed, including the need to complete stalled projects.
The home buyers’ association, Forum For People’s Collective Efforts (FPCE), in its letter to Sitharaman noted that the stalled projects can be solved with a stress fund of at least Rs 10,000 crore.
“The objective should be to complete all pending real estate projects pan-India within a span of five years by providing for such stress fund continuously for next five years,” the letter said.
“Also, simultaneously it should also be ensured that the promoters of projects which shall be completed from this ‘stress fund’ should be stripped of all their assets including his personal and company’s assets, to realise the entire funding utilised for completion of those projects,” it said.
The forum in its letter also said that the government should constitute a task force, to identify projects nearing completion which should be taken up first and also identify a public sector enterprise which may be assigned the job to complete such identified projects under supervision of this task force.
Seeking amendments to the Insolvency and Bankruptcy Code (IBC), the forum said that as a home buyer is not a secured creditor, he or she would not be benefited in case of liquidation.
“In order to take this anomaly, and complete the full cycle, we urge you to kindly amend the IBC, to provide that in case of liquidation, home buyers would be ‘primary secured creditors’. This will instil confidence and bring prospective buyers back to the market,” said that letter by Abhay Upadhyay, President of FPCE. Upadhyay is also a member of the Central Advisory Council of RERA.
FPCE also sought changes in the Goods and Services Tax (GST) and said that the GST on under-construction property must be 8 per cent with input tax credit (ITC) as the revocation of ITC has increased the burden on consumers.
Representatives of Jaypee Infratech (JIL) home buyers were also present at the meeting. Talking to the media later, Ravi Kumar, a Jaypee home buyer who was present at the meeting said that they have asked the Minister to intervene and direct state-run NBCC to make its resolution plan for acquiring JIL more “friendly” for home buyers.
“We are of the view that if the government intervenes, the Jaypee Infratech issue can be solved,” Kumar said. Representatives of the over 22,000 JIL home buyers are of the view that as the company has a large land bank and the Yamuna Expressway, monetising these assets would significantly help financing the stalled projects.