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Real estate players hail FM’s move to extend RERA deadline, Covid 19 to be treated as Force Majeure

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After Prime Minister Narendra Modi’s announcement on Tuesday, Finance Minister, Nirmala Sitharaman on Wednesday delineated the first tranche of Rs. 20 lakh crore package. Finance Minister Nirmala Sitharaman’s decision to extend completion deadlines on real estate projects under RERA scheduled to expire on or after March 25, 2020, has been hailed across the real estate sector. Sitharaman said that COVID-19 would be treated as an event which could invoke Force Majeure clause and that the Union Urban Development Ministry would issue advisories to states and union territories in this regard.

“Regulators can be flexible with the contract signed,” said Sitharaman, “This can also mean that necessary changes will mean fresh project certificates, and they (the regulator) can extend registration and completion dates by six months, suo moto, for all registered projects up to March 25, 2020.”

The decision to infuse Rs 30,000 crore by way of a special liquidity scheme into NBFCs, HFCs and MFIs has also been lauded by the fraternity.

Real estate developers and other stakeholders, on the expected lines, hailed the Government’s. Following are the excerpts of some of the prominent industry stakeholders –

Prashant Tiwari, President, CREDAI Western UP, “The announcement under the Aatamnirbhar Bharat by the finance minister Nirmala Sitharaman for the real estate sector would bring relief to the builders. The COVID 19 period has been treated as force majeure and relaxes timeline. Relaxation in registration and completion date for the ongoing projects is extended for six months for all registered projects is a welcome move. However, this is the first instant assistance by the government that was highly and naturally required. We were expecting relaxation for one year to complete the projects and are waiting for more relief from the government in the coming days.”

Nimish Gupta FRICS – MD, South Asia – RICS South Asia 
“RICS commends the Government on the various stimuli, extended to industry. These are much-needed steps, that will aide the Indian economy on the road to recovery, as an aftermath of the global COVID pandemic, that has had a manifold impact on the financial health of businesses. Linking MSME’s to e-markets is a welcome directional change. The cash flow relaxation on account of bank guarantees being reduced to cover the pending value of work, the credit guarantee scheme for NBFCs and HFCs, will also prove extremely helpful in building much-needed liquidity flow across the chain. Specifically, with respect to the built environment sector, the Hon’ble Finance Minister has addressed one of the most pertinent challenges, with respect to the ambiguity the sector was weighing on contractual agreements. With stakeholders being allowed to rely on ‘force majeure’ clauses, there is much respite for developers and contractors alike. The extension of the construction period by 6 months, without any cost implications for all Government projects, relaxation of global tender norms for projects under INR 200 crores will provide relief for the construction sector as well. Additionally, RERA’s will be empowered to use these provisions to ensure project completions are enforced within the extended time frame. We hope to receive more sustenance for the built environment sector in the coming months ”

Dr. Niranjan Hiranandani – National President – NAREDCO 
Relaxation in project timelines under RERA Act will bring in sigh of relief to the developers and safeguard the interest of homebuyers with the revised new timelines for their dream home deliverables. This ensures homebuyers trust in the project and grants breather to the developer’s fraternity for coping up with backlogged work due to natural disaster delays.The industry is pegging a big hope on much awaited fiscal relief to be granted to the second largest employment generating sector. Liquidity infusion will be imperative to turn around the depressing scenario of the sector.

The other announcement which is positive for real estate is the announcement of INR 30,000 crore special liquidity scheme for Non-Banking Finance Companies (NBFCs) and Home Finance Companies (HFCs) and Micro Finance Institutions (MFIs). NBFCs and HFCs are major sources of credit for real estate, the impact should be easing of the liquidity crisis, especially for stressed players.

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Anuj Puri, Chairman – ANAROCK Property Consultants
Providing a major relief to real estate developers, the government has extended the timeline for project completions and registration by 6 months. This is a big move that will destress developers significantly, since construction activity had been halted all across the country. Homebuyers’ wait for their homes will get extended by this move, but this was in any case inevitable. Further, the announcement of INR 30,000 crore special liquidity scheme for NBFCs/HFCs and MFIs will ease liquidity woes of stressed players. This will benefit the real estate sector significantly, given that NBFCs and HFCs are major lenders to it. As per ANAROCK research, NBFCs and HFCs together contribute almost 56% of total lending to real estate in India currently. In another major move to revive the MSMEs, the FM tweaked the definition of such companies to provide benefits to many more units. The collateral-free automatic loan for MSMEs worth INR 3 lakh crores will give a lifeline to nearly 45 lakh units for four years. With this, the government aims to curtail job losses, and this could indirectly benefit affordable housing. Fear of job losses may have caused many potential affordable home buyers to defer their purchase decisions.

Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa
“The announcement to treat COVID-19 as an event of ‘Force Majeure’ and as an ‘Act of God’, and permission to extend project completion timelines and other statuary compliances under RERA by 6 months is a positive step for the developer community. It will enable them to deliver projects to the end consumer under the new timeline. In addition to this, the announcement of liquidity measures for NBFCs and HFCs is also an encouraging step and will provide much needed relief to the sector.”

Yash Miglani, MD Migsun Group
The sector has been requesting the government for measures that can help maintain the good image of real estate that has emerged especially after this government came with RERA. The latest ‘Act of God’ would have wiped out all the positive efforts made by the developers towards streamlining. In this backdrop, the announcements made by the FM will help the sector save its hard-earned image.

Vijay Verma, CEO, Sunworld Group
Real estate sector has always been in a hustle of delivering projects within registered timelines, procuring timely approvals from authorities and departments. The lockdown bringing every sector to standstill added to the miseries of the property market. We are grateful for the government’s intervention with reduced repo rates, resuming of construction activities, the recent announcements of extended timelines for registered projects and an additional extension of 3 months for projects by RERA. They will be distressing the developers and providing assurance to the homebuyers for timely deliveries. A foresighted approach for issuing fresh ‘Project Registration Certificates’ automatically with revised timelines, reflects hope for a promising future.

Uddhav Poddar, MD, Bhumika Group
“We welcome the announcements made by Hon’ble PM and FM, and hope for the speedy implementation of all of these as the economy is already in the ICU state. Real estate is one of the largest employment generators, employing a large part of migrant labour population of the country welcomes the reliefs pertaining to the extension of project completion deadlines, but the main concern today is of liquidity and for that, there needs to be a direct push to banks and NBFC’s to lend to this sector. Overall very positive but quick implementation would be the key”.

Arjunpreet Singh Sahni, Executive Director, Solitaire Group
“Following the announcement of Rs 20 lakh crore fiscal stimulus economic package made by the prime minister, the finance minister Nirmala Sitharaman has today provided the much-needed relief to the real estate sector by announcing force majeure under RERA and relaxed timelines for registration and completion of projects for another six months. These steps are highly welcome in view of the current crisis situation faced by the industry due to the COVID-19 impact owing to which the real estate sector is facing supply chain disruptions and struggling with a shortage of labour at sites. In such a scenario, these announcements will certainly help the industry tide over the current turbulence phase. Further, the provision of Rs 30,000 crore special liquidity scheme to NBFCs will also help revive the demand and improve the overall market sentiments.”

J C Sharma, VC & MD, SOBHA Limited.
” FM presented a comprehensive vision to make India a self-reliant nation by focusing on MSME’s, construction, real estate,  NBFC’s  and Micro Finance. We welcome these laudable steps by the government towards the most crucial sectors that contribute significantly to the growth and employment of the economy. In support of the real estate sector, an announcement on extension of registration and completion dates of projects suo-moto by 6 months of all registered projects, expiring on are after 25 March, 2020 without individual application is very thoughtful. The extension for various statutory compliance under RERA will further aid in providing ease to developers and buyers. Additional support of one-year extension has been provided by the government for loans by NBFCs to commercial real estate sector from the date for commencement for commercial operations (DCCO) will spur the growth and de-stress the sector. All these steps will ease the current situation, preserve financial stability and assure the homebuyers of delivery of their booked houses with revised timelines. While this was the first addressal in a line of series by Nirmala Sitharaman, we look forward to further announcements that will address the woes of the sector and economy”.

Harvinder Singh Sikka, MD, Sikka Group
COVID-19 has been a clarion call globally. We are very thankful for Govt. of India’s proactive support to the real estate industry. Declaration of COVID-19 as an ‘act of God’ under regulatory authorities, pushing the dates of registration and completion suo-moto by another 6 months for the projects expiring on and after 25th March,2020 will prevent the developers from entering into defaulting. Even post-lockdown, the procurement of raw materials and presence of labour in full force will be certain setbacks leading to delay in work at construction sites. An extended timeline will provide an opportunity to developers and contractors for planning out the way forward upon understanding these situations closely.

Prateek Mittal, Executive Director, Sushma Group
We welcome the measures undertaken by the government to support the real estate sector amidst the ongoing crisis. With the infusion of Rs 30,000 crore to the NBFCs, liquidity crunch in the housing finance will be eased off to an extent. Apart from that, post giving the green flag to resume the construction activities, the extension of registration and completion date suo moto by 6 months will certainly provide great relief to the developers, who have been struggling in coping up with the timelines due to covid19 lockdown.

Rajat Goel, JMD, MRG World
The recent announcements made by FM Nirmala Sitharaman under the Self- Reliant India Movement have eased the developments for the real estate sector in coming months. It has treated COVID-19 as an event of ‘Force Majeure’ under RERA, along with extension of registration and completion date suo-moto by 6 months for all registered projects expiring on or after 25th March, 2020 without any individual applications from the developers. The liberty of extending it by another 3 months is also given to regulatory authorities. We welcome the government’s measure for understanding our position in this difficult time and helping us maintain positive relations with our customers. Post- COVID scenario has been eased out for us, and we would be looking forward to complete our projects under this new timeline, with due support from RERA and Urban Ministry authorities.

Himanshu Chaturvedi, Chief Strategy Officer, Tata Projects Ltd.
.“The Government’s Atmanirbhar Bharat initiative has recognised “Infrastructure” as one of the five pillars. This is an acknowledgement of the sector’s key role in India’s development and large scale employment generation.

The extension of up to six months to be given by GoI Agencies is a welcome move since many projects across the nation were affected due to the sudden disruption caused by the pandemic – much of this such as lockdown was beyond the control of contractors.

The move to allow government agencies to partially release bank guarantees to the extent of completed contract will definitely improve the industry’s cash flow situation, especially in case of smaller and mid-sized contractors.

The measures for MSMEs such as revised definition or classification, collateral free automatic loans, subordinate debt-based scheme and equity support will provide an impetus. It must be remembered that many such MSMEs supply various construction material to the infrastructure sector. A strong MSMEs sector is important to the infrastructure sector and overall national economy.”

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani.

The bold economic measures announced today display the government’s strong commitment to tackle the unprecedented challenges and restore confidence and faith in the economy. Providing an extension for completion of projects and treating the coronavirus outbreak as an event of ‘force majeure’ under RERA, brings a major relief for the sector that has been the backbone of the economy. During the lockdown, the construction industry has nearly come to a standstill thus negating the green shoots that had just begun appearing prior the pandemic came to the fore. In order to tackle the subdued demand from home buyers during and post COVID-19, reduction in interest rates on home loans will encourage fence-sitters to act quickly to invest in a property. Government measures towards improving liquidity and providing a boost to the MSME sector is also commendable. The Special Liquidity Scheme of Rs 30000 crore for non-banking financial companies, microfinance companies and housing finance companies will bring in liquidity in the market. The various economic measures announced by the government during COVID have given a powerful booster dose to revive the Indian economy. The resolution to remain self-reliant coupled with revolutionary reforms will surely lead the country on a high growth trajectory.

Ravindra Sudhakar, CEO at Reliance Home Finance
The Finance Ministry’s advise to States and UT to treat COVID-19 as an event of ‘Force Majeure’ under RERA will provide major relief to real estate developers whose projects have been stuck due to lack of liquidity and cash flow stoppages. The move to extend the registration and completion date by 6 months for all registered projects will provide more time to such developers to raise fresh financing or debt to complete their pending projects. The ease of compliance norms under RERA and other laws is timely and well thought out decision to ease the stress of small developers, especially those into affordable housing.

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