The Uttar Pradesh government on December 19, 2023 approved the recommendations of the committee chaired by former NITI Aayog CEO Amitabh Kant, formed by the Union Ministry of Housing and Urban Affairs in March, 2023 and comprising of officials from various government bodies, aimed to address the challenges faced by homebuyers in stalled real estate projects across the country.

 

Key Findings of the Committee:

The committee’s report highlighted the staggering scale of stalled projects, estimating 412,000 dwelling units worth INR 4,080 billion as “stressed.” A substantial 44% of these units are in the National Capital Region, while 21% are in the Mumbai Metropolitan Region. The primary cause identified for the same was the “lack of financial viability,” leading to cost overruns and delays.

The committee emphasized the need to enhance the Internal Rate of Return of these projects to attract funding, suggesting that stakeholders, including developers, financiers, and land authorities, may need to accept reduced returns to make the projects financially viable.

 

Major Committee Recommendations Accepted by Uttar Pradesh Government:

  • Mandatory RERA Registration: The committee’s stress on enforcing the provisions of the Real Estate (Regulation and Development) Act, 2016, has been accepted by the Uttar Pradesh government. This move is anticipated to enhance transparency in the real estate sector.
  • Rehabilitation Package for Stalled Projects: The UP-State Finance Ministry announced that the government has decided to implement rehabilitation packages to revive stalled projects. Developers committing to completing projects within three years will benefit from this initiative. The cabinet has approved a model package for Noida and Greater Noida, including a ‘zero period’ for two years, during which interest and penalties will be waived. During this period, no interest would be charged from the promoter of the project.
  • SWAMIH Fund Implementation: The state government has agreed to explore the implementation of the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund, as recommended by the committee. The Ministry of Housing and Urban Affairs will be involved in formulating a detailed scheme for the proactive financing of stalled projects through SWAMIH Fund.

Author: sarafandpartners