New Delhi: In a significant move to help the aggrieved home buyers across the country who are waiting to get possession of their houses, the government today announced setting up of a Rs 10,000 crore fund to help the stuck housing project where at-least 60 percent of the construction work has been completed.
“The fund will provide last mile funding option to those affordable and mid-income housing projects which are stuck due to one reason or the other and help the developers to hand over the properties to the buyers. The fund will have corpus from LIC and sovereign funds. Experts from banking and housing sectors will operate the fund,’ said Finance Minister Nirmala Sitharaman said while addressing the media today.
However, developers that are facing insolvency proceedings by National Company Law Tribunal or those that have been declared NPAs will not be entitled to get any monetary help from the fund, she clarified. The projects also have to be networth positive to receive help from the fund.
She said that the fund will help developers not just in Delhi NCR or Mumbai but all over the country to hand over the properties for which the buyers have paid and area waiting to get possession. The rules and regulations of the fund will be decided in a day or two.
She also announced measures to help government servants to get lower interests rate loans to buy homes for themselves. The interest rates on House Building Aadvance will be reduced and linked to 10-year G-sec yields.
External Commercial Borrowing gildelines will be relaxed to help finance home buyers who are eligible under PMAY (Pradhan Mantri Awas Yojna) in consultation with RBI, she said.
“The Finance Minister’s announcement of a Rs 10,000 crore fund for stuck projects could well be the lifeline the real estate sector, grappling with a slowdown, needs. The move to involve professionals and domain experts from fields such as banking and housing finance to identify projects and manage the fund is very astute and commendable,” said Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/Proptiger.com
“The Finance Minister announced two riders to the stress fund, and the industry holds its breath on both. First she mentioned the fund will start with Rs. 20,000 crore. We hope it will be enhanced. Secondly, she said this is not for projects which are already under NCLT and NPA, given that delayed projects in both these categories are already undergoing due process under existing set-up. For delayed and stalled projects – for example in the NCR – this will be a major problem, given that most of such projects are under NCLT and NPA, and will not get the benefit of this stress fund. This announcement will not solve the problem of delayed/ stalled projects and affected home seekers in locations like the NCR,” said Niranjan Hiranandani, President, NAREDCO.
“This is a major boost to the housing sector (affordable and mid segment) and a perfect festive treat for lakhs of homebuyers who have been anxiously waiting for their prized possession. However, since it doesn’t include projects that are under NPAs and NCLT, there is a possibility that not all homebuyers will get the said relief,” said Anuj Puri, Chairman, ANAROCK Property Consultants.
Home buyers, under the aegis of Forum for People’s Collective Efforts (FPCE), had last month written a letter to Prime Minister Modi urging him to help complete the stuck projects, levy strict punishment to errant builders and take a slew of measures to clear the realty mess in the country.
According to a report by property consultancy ANAROCK, there are 1.74 lakh homes that are stuck in about 220 projects in juts top 7 cities of the country.