BUYERS FIRST - Noida okays exit policy to rescue stuck realty projects
The Project Settlement Policy , which all these new measures are a part of, has been sent to the state government for approval and will come into force once it gets the green signal, which is only a matter of time.
Noida Authority chairperson Rama Raman said once the state government's approval comes, developers will have to open the escrow account.
“The account will be for each project of each builder and will be applicable to all the three authorities in Gautam Budh Nagar (Noida, Greater Noida and YEIDA). It will be operated by the builder and the representative of buyers in that project jointly,“ he said. The exit policy has been chiefly designed for four scenarios that most affect homebuyers and real estate companies in the twin cities.
Scenario 1: If a realtor has been allotted land but hasn't started construction or created third-party rights, which means the right to sell to buyers. “The project will be cancelled and the realtor can surrender the land to the Authority . But the realtor will have to forfeit 30% of the amount paid to the Authority ,“ Raman said. If third-party rights have been created, the remaining 70% will be returned to buyers, explained Deepak Agarwal, CEO of the Greater Noida Industrial Development Authority .
“The amount returned to the buyer will be the initial amount paid without interest. If there is an agreement between the builder and buyer on the interest amount, it will have to be borne by the builder,“ he added.
Scenario 2: If a builder has completed a project but is unable to procure a completion certificate. The realtor will be provided with a rescheduled payment policy for dues against the land cost. The time-limit for this policy will be decided by the UP government within a month. “In cases where buyers are unable to register their properties, builders have to deposit 10% of the amount due (instead of the current 25%). Buyers can then register their properties and execute lease deeds,“ Agarwal said.
Scenario 3: If a builder has launched a project on a part of the land allotted and the rest is lying unused. The realtor will have to forfeit 15% of the amount deposited with the Authority and will be allotted land proportionate to the remaining amount. This will mean a builder can retain only that portion of the land where a project has been launched.The Authority will take back the rest.
Scenario 4: If a realtor needs a partner to finish a project. “Builders can take on board a co-developer to rescue sick realty ,“ Agarwal explained. “If builders have leftover floor area ratio (FAR) in their projects, they will be allowed to sell it to co-developers, who will complete the project. Proceeds from the sale will be deposited in an escrow account and used to pay off home buyers.“
Agarwal said the purpose of the policy was not to bail out builders but redress homebuyers' problems.