SC ruling that daughters have equal coparcenary rights in a joint HUF ‘progressive’; settles all ambiguities, legal experts
The Supreme Court ruling that daughters have equal coparcenary rights in a Hindu Undivided Family (HUF) property even if the father died before the Hindu Succession (Amendment) Act, 2005, came into force is a ‘progressive step’, and settles the ambiguity surrounding the nature and extent of a daughter’s rights to inherit the property, legal experts told Moneycontrol.
The apex court's verdict came on the issue whether the amendment to the Hindu Succession Act, 1956, granting equal rights to daughters to inherit ancestral property would have retrospective effect.
What this means is that whether with the passing of the Hindu Succession (Amendment) Act, 2005, a daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son, or if she could be denied her share on the ground that she were born prior to the enactment of the Act on September 9, 2005, and, therefore, cannot be treated as coparcener.
“This judgment has settled the ambiguity surrounding the nature and extent of a daughter’s rights in a HUF property and thus settled a disputed question of law. This clarification was vital in setting aside the grip on previous decisions accorded coparcenary rights to daughters only if both father and daughter were alive as on September 9, 2005, when the amendment was notified,” said Sonam Chandwani, managing partner at KS Legal & Associates.
The judgement is a "welcome move" and clears all webs around a daughter's rights and interests over an HUF property.
“While clarifying that coparcenary is a birth right, the verdict confirms that a daughter cannot be deprived of the right to equality granted to her under Section 6 of the Hindu Succession Act, 1956, even in case the father expires before the 2005 amendment. The ruling aids the society at large in moving towards a more sensible conclusion and breaks free from the deadlock of the dated patriarchal system,” said Rahul Arora, partner, Trilegal.
“Finally it’s crystallised the law with respect to rights of women as coparceners and removing the inequality under succession laws that had been prevalent historically. A huge number or cases all over the country were grappling with this issue and hopefully now things can proceed expeditiously,” said Vaibhav Gaggar, managing partner, Gaggar & Associates.
Delhi court pulls up Miniso Life Style India for non-payment of rent during COVID-19 lockdown
A Delhi court has pulled up a subsidiary of Japanese designer lifestyle brand Miniso for non-payment of rent for leased property here during the COVID-19 lockdown, saying the company had no dearth of money and directed it to clear all arrears within seven days. The court said in its interim order that there was no dearth of money with Miniso Life Style Pvt Ltd and was successfully running business at almost 10 similar premises on rent in Delhi.
District Judge Raj Kumar Chauhan directed Miniso Life Style to pay the rent to Uma Sharma, Varun Prakash and Puneet Prakash for its rented premise at south Delhi's Greater Kailash.
The court directed the company in its August 6 order to pay the rent arrears for the lockdown as well as post lockdown period, April to July, within seven days, failing which the petitioners may take the necessary actions under law.
"The respondent (Miniso Life Style) is also doing its business in post lockdown from the tenanted premises. Even on that account also no case is made out for suspension of rent during the lockdown period and there is no justified reason with the respondent for nonpayment of the rent during the post lockdown period as they are enjoying the premises and doing their business from it.
"Since no reasons have been assigned for non-payment of rent for the post lockdown period, the payment of rent for the period will be strictly as per lease agreement between the parties. Petitioners are even entitled to the penal interest for non-payment of rent," the court said in its order.
It, however, said that the observations in the interim order were prima facie in nature and would not prejudice either party before the Arbitral Tribunal.
It further took note of the fact that Sharma was a senior citizen and the rent amount was the only source of income for her as well as for her son who was suffering from COVID-19 contagion.
Sharma and her son Varun claimed in their petition that the monthly rent of the leased out property was Rs 9,75,000 plus taxes per month, which was divided equally among the three petitioners in the case.
On March 23, the head of business development of Miniso Life Style had through an e-mail requested them to consider waiver of rent for lockdown period April and May, the petition said.
It further said that in April, Sharma agreed to waive the penal interest on the delayed payment which was 18 percent per annum.
In June, the head of the business development sent a proposal that they would be paying 70 percent of the arrears of rent for the month of April and 90 percent of the rent for June and July 2020, it added.
"Since the suspension of rent is not permissible in these facts and circumstances, respondent at the most could have sought for some postponement or relaxation in the schedule of payment owing the lockdown. This court has tried to facilitate amicable settlement of the dispute between the parties. Matter was even referred to mediation where it could not be settled," it said.
The court said that it even tried to facilitate the parties to arrive to a judicial settlement of their dispute and with the persuasion of the court the landlords (petitioners) even agreed to waive the rent for the month of April and May provided the company start making payment of the due rent for the post lockdown period from June onwards.
It noted that the company has not paid even the rent for the post lockdown period and its head of business development could not agree for settlement despite seeking adjournment for taking instruction from the higher authority of the company.
Mindspace Business Parks REIT listing affirms appetite for more launches in the Indian market
Mindspace Business Parks REIT, with an issue size of Rs 4500 crore, made its market debut on August 7, with a premium of nearly 11 per cent against its issue price of Rs 275 per unit. This, say real estate experts, may encourage more real estate developers to enter the REITs market and improve the fund flow into the sector.
The units of Mindspace Business Parks REIT owned by K Raheja and Blackstone is the second REIT to be launched in the country.
Mindspace Business Parks REIT made its market debut on August 7 and closed with a premium of over 10 per cent against its issue price of Rs 275 per unit. The units of the REIT listed at Rs 304, reflecting a gain of 10.54 per cent from the issue price on the BSE. During the day, it touched a high of Rs 308.90, zooming 12.32 per cent. Later, it closed at Rs 303.87, up 10.49 per cent.
On the NSE, it closed at Rs 303, a gain of 10.18 per cent after debuting at Rs 302, a rise of 9.81 per cent.
Commenting on the listing, Jonathan Gray, president and chief operating officer of Blackstone, said: "Blackstone is honored to be partners with the Rahejas to help create India's second public REIT. Like Embassy last year, Mindspace has tremendous assets and a real commitment to producing shareholder value."
“Investors have demonstrated a strong interest for Mindspace REIT and this has resulted in huge over-subscription of the issue. Some of the key factors for the success of this REIT are strong developer credentials combined with positive outlook for commercial real estate, established portfolio that ensures stability of returns via rental income. This clubbed with the fact that the majority of distribution of income is by way of tax-free dividend works very well in investors’ interest,” said Ramesh Nair, CEO and country head (India) JLL.
The launch indicates the coming of age of Indian commercial real estate market story.
“It was a one REIT stock story until now. Launch of a REIT by one more player adds to the maturing of the commercial real estate listed space. With the REIT market deepening there are clearly more avenues for larger foreign institutional players like pension, retirement funds and insurance companies to deploy long-term capital in asset backed space instruments,” said Anckur Srivasttava of GenReal Advisers.
REITs are listed entities that invest in income-generating properties and distribute at least 90 percent of their income proceeds to unit-holders through dividends. After registration with SEBI, units of REITs will have to be mandatorily listed on exchanges and traded like securities.
SEBI notified REIT's regulations in 2014, allowing setting up and listing of such trusts, which are popular in some advanced markets.
RBI Monetary Policy: Real estate sector welcomes Rs 5,000 crore additional liquidity infusion
The Reserve Bank of India (RBI) Governor Shaktikanta Das on August 6 announced an additional special liquidity facility of Rs 5,000 crore for National Housing Bank, a ‘much-needed’ move to relieve the real estate sector battling liquidity issues in COVID-19 times.
Das said Rs 5,000 crore will be provided to NHB and the facility will be for a period of one year to be charged at the repo rate.
A loan resolution plan, which allows for payment moratorium up to two years for corporate and personal borrowers should also provide a breather to stressed real estate developers and individual borrowers in the housing segment alike.
Das was addressing a conference to announce the outcome of the bi-monthly monetary policy committee meeting. RBI MPC unanimously voted to retain the policy repo rate at 4 percent to keeping inflation target in mind.
“It will help infuse capital into the HFCs and eventually provide relief to developers battling liquidity issues in COVID-19 times,” said Anuj Puri, chairman – ANAROCK Property Consultants.
Liquidity of Rs 5,000 crore announced to be infused into NHB will definitely aid the reeling sector to tide over the liquidity crisis. The enhanced finance flow should see developers in need of last mile funding being able to complete their stalled projects. This indicates that the fiscal measures by RBI have started showing the positive outcomes on the economy, said Niranjan Hiranandani, President, NAREDCO.
"We look forward to the recommendations of the Kamath Committee on the details for the real estate segment. We also welcome the announcement of further liquidity infusion to the tune of Rs 5000 crore to National Housing Board (NHB) which should be able to provide some relief during these times of crisis. While the sector was looking at a further revision in policy rate, to boost demand, we appreciate the accommodative stance by the RBI, in the wake of high rate of inflation which may have necessitated keeping policy rates unchanged," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
The governor revealed that real GDP of India will trend in the negative territory for the majority of FY 20 – 21, which causes concern for the real estate sector as economic growth and stability is a key ingredient for its long-term growth, he said.
Ajay Sharma, managing director, Valuation Services, Colliers International India said that with repo rate and CRR rate unchanged RBI has ensured the transmission of liquidity in system is further supported and at same time keep tight leash on headline inflation.
“This balancing act coupled with infusion of funds to NHB will benefit real estate where emphasis on project completion and value creation is paramount. The unchanged parameter will ensure the continued availability of housing loans at rates that are at historic lows in 15 years which will go further in boosting residential demand,” he said.
Experts said that the pause on rate cuts was also on the back of the previous transmission of rate cuts to consumers through mortgage loans. In response to the cumulative rate cut of 115 bps announced since February 2020.
“Banks have already transmitted 70-90 bps in their home loan portfolio, being the fastest transmission,” said Ramesh Nair, CEO and Country Head (India), JLL.
He, however, said the one-time restructuring of loan would have given the much-needed respite to the real estate sector which has been facing headwinds due to the pandemic.
Today’s RBI policy statement is a “balanced and well-thought move in the right direction” for growth of the economy and the country. Right from additional liquidity to NBFC’s to controlling, inflation the measures announced have a balanced and accommodative stance in them,” said Jaxay Shah, chairman, CREDAI National.
"The announcement by RBI to facilitate the National Housing Bank with the liquidity of Rs 5,000 crore is an encouraging step for the housing sector which has been under immense stress since the lockdown. This move will help NBFCs and housing finance companies to lend more money to homebuyers and generate demand back in the market,” said Farshid Cooper, MD, Spenta Corporation.
"RBI focusing on augmenting liquidity with an accommodative stance with no rate cut is a smart move in terms of channelizing the demand-based macros in the economy," said Rohit Poddar, MD, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra.
An additional special liquidity facility (ASLF) is seen as a welcome move. ASLF of Rs 5,000 crore to the National Housing Bank will provide much required cushioning for the housing finance companies to lower the home interest rates. This will translate into an upsurge in demand with a lower cost of credit to the home buyer and materialize in a likely upsurge in residential inventory offtake especially in the near onset of festivity in the country, he added.
Ram temple: Real estate players flock to Ayodhya
When Prime Minister Narendra Modi will lay the foundation stone of the Ram temple in Ayodhya on August 5, along with millions of devotees, real estate players, too, will be watching the proceedings, hoping for a start in a town that holds a lot of promise for them.
Studio apartments, 1-BHK flats, second houses and starred hotels are what developers have planned for this small dusty town in Uttar Pradesh’s Faizabad district that had been a battleground of faiths for decades till the Supreme Court settled the bitter land dispute in 2019.
“We would be keen to launch service apartments and second homes in this city,” Manoj Gaur, managing director of the Gaurs Group, told Moneycontrol over the phone. “This town presents immense opportunities.”
The price of farmland has gone up more than 30 percent since the Supreme Court order, developers scouting for real estate parcels told Moneycontrol.
“An agricultural land parcel spread across an acre was available for Rs 75 lakh to Rs 1 crore before the SC order. Currently, the asking price is Rs 1.25 to Rs 1.50 crore per acre, depending on the location. Most of these are located 10 to 15 km from the temple site,” Shobhik Goyyal, member, Credai UP, and promoter of OP Chains Housings, which conducted a survey of the area, told Moneycontrol.
The top court ordered that the disputed site be given to Hindus to build a Ram temple and Muslims be allotted another piece of land to build a mosque.
Gaur and other builders are now waiting for Ayodhya’s Master Plan 2031.
““Ayodhya is in the limelight and we are in talks with the government through bodies such as PHDCCI and Credai,” Gaur said. Credai is an all-India lobby group of real estate developers.
Ayodhya is among the towns to be developed under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) that aims to provide basic amenities like water, sewerage and transport aimed at changing the face of urban India.
“The National Remote Sensing Centre has been tasked with providing satellite imagery of the town. The team is working on it. The draft plan is likely to be ready by September 2020 and the final Master Plan of Ayodhya 2031 is expected to be ready by January 2021,” Anoop Shrivastava, Chief Town and Country Planner, told Moneycontrol over the phone.
A master plan outlines developmental works expected to be carried out in an area. It demarcates land use—for residential and commercial purposes, including for hotels that Ayodhya will need in large numbers for pilgrims and workers involved in building the temple. Most of the land available right now is agricultural.
Unlike other asset classes, housing projects in holy cities have largely escaped the slowdown and the coronavirus outbreak unscathed.
Retirees or NRIs, who may want wish to spend a few months at the birthplace of Ram, will be among top property buyers in the town, say realtors.
Ayodhya has the potential to emerge as an ideal market for second homes or retirement homes.
Developers have launched several projects in holy cities such as Amritsar, Haridwar-Rishikesh, the four Hindu Dhams of Badrinath, Dwarka, Puri and Rameswaram and in South Indian temple towns of Madurai and Tirupati.
Ramandeep Singh, Alliance Residency Ltd, Credai, UP, said there was a dearth of organised real estate projects in the area. “There may also be demand from the workforce that comes to work in this area going forward besides demand for pilgrimage housing. Most of the land right now is held by the Akharas.” Akharas are Hindu monastic groups.
Also, most of the agricultural land parcels are 10 to 15 km away from the temple site. “Two five-star hotels have already been signed up. We are hoping that five more would come up in the area besides 20 odd three to 4-star hotels,” said Goyyal of Credai UP.
Once the Master Plan is in place, developers foresee a demand for studio apartments or 1-BHK units.
“In the next five to seven years, one may see demand for at least 5,000 units in the range of Rs 15 lakh to Rs 30 lakh in this area, with maximum demand coming in from devotees. More than 15 developers have already shown interest,” he said.
The town would also need a massive infrastructure upgrade, said Shobhit Dass, president, Credai, UP. “There is not a single branded hotel in the area, only dharmshalas. Senior living housing could also come up in this area,” he said.
“We are all waiting for the master plan to be ready and once it is in place, the entire area is expected to be opened up for development,” he adds.
Is crowdfunding the answer to sharp investing in real estate?
Real estate has always been a great investment opportunity for investors. In my opinion, real estate can be the safest and best way to achieve financial freedom. However, buying properties has been out of bounds to most individuals as it involves a huge amount of money. But what if I told you that you can participate in highly sophisticated projects which generate high income?
Real estate crowdfunding is a way of investing where a pool of individuals contribute a small amount of capital towards a specific real estate deal. The process is usually conducted through an online platform to reach an audience of potential investors.
For developers, crowdfunding offers them access to capital for a real estate development project. This approach has become a feasible alternative to traditional ways of raising capital.
As for the investors, it offers them the ability to become a shareholder in assets they may never be able to acquire as individuals.
How it works
The idea behind crowdfunding is that when a developer or real estate professional finds an opportunity, they don’t always have the ability to pursue the project by themselves. So they allow individuals to contribute some of the capital in order to execute the project.
First, the sponsor identifies an opportunity, plans the acquisition of property, and even takes the responsibility of its management and eventual sale of the asset. The crowdfunding platform is where the sponsor finds the investors who are looking to create passive income from real estate. A Special Purpose Vehicle (SPV) is created to acquire the asset in which the investors are shareholders.
Here’s an example of how this might work: Let’s say that a real developer finds an outdated commercial building that lacks modern amenities for a sale price of say, Rs 3 crore. After analysis, he determines that with an investment of 2Cr in renovations and leasing out the entire building, he can double the property’s rental income and the building will have a market value of Rs 8 crore within 4-5years. So instead of taking a bank loan for the entire Rs 5 crore, he opens up the opportunity for individual investors to become stakeholders in the project.
There are two ways an investor can be involved in a crowdfunding opportunity. When you invest in an equity-based model, you receive returns based on property rental income or earn a share of the property’s appraised value in case it is sold. Equity provides better returns compared to debt investing. Debt-based funding has been more popular as investors receive a fixed interest rate appropriate to the amount that you have invested.
Why you should invest in a crowdfunded real estate opportunity
When a sponsor identifies a real estate opportunity, he usually doesn’t have the capital to execute the project himself. So they allow individuals to contribute to the capital to execute the project.
Crowdfunding allows you to invest in highly sophisticated projects with low investment amounts. Unlike REITs, crowdfunded opportunities tend to be more transparent as it allows investment into specific projects without the hassles of maintaining and managing the assets.
Like any investment opportunity, it is important to evaluate crowdfunded real estate investments as they are highly illiquid. Unlike when you own a property by yourself, you can’t sell your investment whenever you want. You are committed for the entire holding period of the project.
Real estate crowdfunding opens the door to many investors who cannot otherwise invest in real estate. This is a great model for low investment investors who get access to high income-generating real estate. However, you need to evaluate a crowdfunding opportunity before investing.
Raiyaan Nayeem is the founder of Hubloft, a home-sharing company that enables homeowners to create passive income from their second homes.
Housing Minister launches online platforms to market real estate projects
Housing and Urban Affairs Minister Hardeep Singh Puri, on July 31, launched the online platforms of the two developers’ bodies CREDAI and NAREDCO to market residential properties.
He also released a guide book for affordable rental housing scheme for migrants.
The minister launched 'CREDAI Awaas App' and NAREDCO's online portal 'HousingforAll.com' through a video conference.
He also released the knowledge pack of the government's 'Affordable Rental Housing Complexes' (ARHCs) scheme that has been launched to provide rental accommodations to migrant and urban poor.
The CREDAI Awaas App would work as a gateway for homebuyers from around the world to connect with genuine member developers whose RERA registered property will be available on this app, the minister said.
On the e-commerce portal by NAREDCO called Housing For All, he said that the portal would host e-commerce housing sales where buyers from across the globe can explore and buy ready-to-move-in homes. It aims to ease the challenges faced by the real estate industry while building confidence in consumers by promoting transparency, accountability, and efficiency.
"We have launched these two portals. The idea came recently and we have been able to implement it," Puri said.
The Union Cabinet on July 8 approved the affordable rental housing complexes (ARHCs) scheme for urban migrants employed in the industries, service sector and manufacturing sector close to their workplace in industrial as well as in non-formal urban sectors. The scheme has been launched under the Pradhan Mantri Awas Yojana Urban (PMAY-U) as part of Atma Nirbhar Bharat Abhiyan.
The ARHCs scheme is expected to aid real estate developers in retain the labour force on their sites, the minister said, adding that rental housing would also be beneficial for young people.
On the sector’s demand for one-time debt restructuring and 100 percent FDI in affordable rental housing, Puri said these demands will be considered.
He also disagreed that the real estate industry was being treated as a step child, saying the government has taken various measures for the growth of the sector.
He also suggested setting up of a permanent working group comprising members from the department and industry bodies, for faster decision making.
To achieve the government's target under the Housing For All by 2022, Puri said the ministry has almost sanctioned the entire 1.12 crore dwelling units as envisaged under the Prime Minister Awas Yojana (Urban). About 70 percent of the sanctioned houses have been grounded.
Housing and Urban Affairs secretary Durga Shanker Mishra said the two new e-commerce platforms by CREDAI and NAREDCO have the potential to become the Amazon of real estate.
In a bid to keep declining housing sales in check and revive the demand amid COVID-19 pandemic, real estate developers will offer over 2.70 lakh ready-to-move-in houses to homebuyers online.
All National Real Estate Development Council (NAREDCO) members would list their housing properties for sale on the e-commerce marketplace ‘NAREDCO Housing For All.’ This is expected to unlock the affordable housing properties worth over Rs 1.21 lakh crore and offer a great opportunity to the national and international homebuyers to buy RERA registered properties at the right prices anywhere in India.
Niranjan Hiranandani, national president, NAREDCO, and ASSOCHAM stated that there is an urgent need for affordable rental housing schemes in cities like Mumbai.
"We have almost around 650 acres of salt pan land in the Mumbai Municipal Corporation limits. There is a need to open up the land for the construction of affordable and low-cost housing in a city like Mumbai where there is an acute paucity of vacant land," he said during the webinar.
Jaxay Shah, chairman, Credai National said that COVID-19 crisis has made people realize the importance of homes. “Proptech is the future of real estate and initiatives such as the CREDAI Awaas App will be instrumental in bridging the hiatus between the customer and developer.”
According to guidelines issued by the housing and urban development ministry, ARHCs will have a two-pronged approach. First, the existing vacant government funded housing complexes will be converted into ARHCs through concession agreements for 25 years.
The concessionaire will make the complexes livable by repair/retrofit and maintenance of rooms and filling up infrastructure gaps like water, sewer/septage, sanitation, roads. States/Union Territories will select concessionaire through transparent bidding. Complexes will revert to urban local bodies (ULB) after 25 years to restart next cycle like earlier or run on their own, the ministry said.
Second, special incentives like use permission, 50 percent additional FAR/FSI, concessional loan at priority sector lending rate, tax reliefs at par with affordable housing will be offered to private/public entities to develop ARHCs on their own available vacant land for 25 years.
Beneficiaries could be labour, urban poor such as street vendors, market or trade associations, industrial workers, manufacturing units, long term tourists, visitors, hospitality sector, students, educational or health institutions.
Homebuyers hire JAL as contractor to complete four towers of a housing project in Noida
The Uttar Pradesh RERA (UP RERA) this week approved an order allowing the homebuyers' association of a project in Noida to take charge of the completion of four stuck towers and the remaining 300-odd units.
Interestingly, the association has decided to hire Jaypee Associates Limited (JAL), the original promoter, as the contractor for the work.
The question here is: Can RERA Authority approach homebuyers' associations or the original developer or for that matter bring in a third party to complete a stalled project?
Yes, it can. RERA can take over an unfinished realty project if it is 80 percent complete. It can act as a facilitator and work with the committee of homebuyers to complete the project under Section 8 of RERA.
Moneycontrol spoke to RERA authorities who said this could become a successful model to complete stuck projects going forward, especially after COVID-19, when more such cases are bound to happen wherein developers may not be in a position to complete projects in the wake of liquidity issues.
Balvinder Kumar, member, UP-Rera said that JAL gave its consent and “we permitted the homebuyers’ association to take control of the project that we had deregistered earlier.”
Kalypso Court is a housing project launched by Jaypee Associates, the parent company of embattled Jaypee Infratech, way back in 2007. Its UP RERA registration lapsed in June 2019 following which the regulator invoked Section 8 of RERA. As many as 240 homebuyers had bought into units in the four incomplete towers.
Seven towers of Kalypso Court were registered under UP-RERA in 2018. The project has a total of 15 towers and 11 of them are complete. Work on four towers is pending. The original date of completion of the project was 2012.
UP RERA Authority has held a series of meetings over the last five months with representatives of the homebuyers association ever since the registration expired last year. The homebuyers have now decided that the project should be completed by the original promoter which is JAL. The estimated fund requirement for completion of the four towers is Rs 104 crore of which 40 percent would be contributed by Jaypee and the remaining would be in the form of receivables from homebuyers.
"This is a unique case because the original promoter is being brought on board. Had a new promoter come in, he would have had to re-evaluate the entire project and that could have become both time consuming and an expensive exercise," said Kumar.
Earlier, UP RERA had offered PSA Impex’s Sampda Livia in Greater Noida to homebuyers’ association. It has also deregistered Bhasin Group’s Festival City in sector 143.
Legal experts said that, it would now be legally presumed that the project is being completed by the Association of Allottees and the propriety rights will remain with JAL even though it would now take on the role of a contractor.
“There’s nothing wrong with the original promoter taking over an incomplete project. The only thing which can perhaps come in the way is initiation of insolvency proceedings against JAL which is pending. This may bring the project completion to a standstill,” said Ashwarya Sinha, a Supreme Court advocate who is representing homebuyers in the Jaypee Infratech case.
Difficult for RERA to undertake projects from scratch
It should be kept in mind that RERA can step in provided a project has reached its completion stage. Doing something from scratch is difficult and not advisable.
“It all depends on the size of the project and should be taken up on a case-to-case basis. It is not something that can be applied across the board,” said RERA experts.
Agreement among all the allottees is also important. The allottees have to trust the committee. "They have to make the payment of the balance amount to the committee," experts said.
Who pays for the remaining construction?
In these cases, some buyers may have paid 80 percent, others may have paid more. But all buyers may have to pay some amount.
"They will have to show the receipts that they have so far paid and the balance money that is due from them to the committee. These amounts will be kept in a separate account and the committee will have to work with corpus," said RERA experts.
The committee will have to make do with the funds collected. They have to decide whether they would want to reduce certain specifications as funds may not be enough.
Flat delayed by four years, NCDRC tells builder to refund homebuyer Rs 3.4 crore with interest
The country's top consumer court has directed Gurugram-based Pioneer Urban Land & Infrastructure Ltd to refund the entire principal amount of Rs 3.45 crore with interest and Rs 25,000 as litigation cost to a homebuyer for a four-year delay in handing over of an apartment.
The National Consumer Disputes Redressal Commission (NCDRC) also held as wholly one-sided and unfair the terms of an “apartment buyer’s agreement” signed between the two sides. The court overlooked the developer’s argument that the delay was because of circumstances that were out of its control.
“The interest at 9 percent per annum has been awarded in the light of the observation of the honourable Supreme Court in a catena of judgments awarding interest, keeping in view the current market situation and that the banks have lowered the interest rates,” the order dated July 23 said.
In view of the disruption caused by the coroanvirus outbreak, the court gave the developer three months to comply with the order, failing interest rate will be raised to 12 percent.
The homebuyer alleged “deficiency in service” as the developer didn’t complete the construction or handed over the possession by October 2015 deadline as mentioned in the Apartment Buyer’s Agreement of March 7, 2012 for a unit of super area of approximately 3,498 sq ft.
The homebuyer applied for a house in the Pioneer Group’s housing project Araya in Sector 62 in Haryana’s Gurugram, by paying a booking amount of Rs 30 lakh, the court was told.
The developer was to apply for the occupation certificate of the project within 39 months from the date of the excavation. The developer was also allowed a grace period of 180 days.
The money asked by the developer from the buyer at the time of excavation was paid in June 2012 but on visiting the site, they found no work had started, the buyer said.
The site looked like an abandoned piece of land, with some construction here and there. There was no one to address their queries, the buyer said.
By December 16, 2015, the buyer had paid Rs 3.22 crore, almost 95 percent of the apartment cost. The apartment was delivered late in 2019.
Even after five years, the developer failed to give possession of the unit. Repeated requests, letters, email, phone calls and even personal visits didn’t help, the court was told.
The homebuyer also alleged that they were forced to sign a one-sided agreement. The builder, as per the agreement, had agreed to pay compensation at the rate of Rs 10 per sq ft per month for the delay.
But, if calculated in terms of financial charges, it comes to approximate at the rate of 1.4 percent p.a. rate of interest and even these charges were to be paid after 39 months which is period for completion of construction, the buyer had said.
The consumer court held that the agreement was unfair to the homebuyer. “The builder could not seek to bind the respondent with such one-sided contractual terms,” the order said.
The builder said that delay was due to the reasons beyond their control.
The builder also said the complainants wanted “to seek more than the contractual benefits from the developer” and were expecting high speculative gains but failed due to a depressed real estate market.
"The continuing support of NCDRC for homebuyers is very encouraging and shows the strict approach of the court. However, it is surprising why RERA has failed to take stringent measures," said advocate Aditya Parolia, who represented homebuyers in the matter. He was referring to the real estate regulatory authority that regulates the sector and is responsible for protecting buyers’ interests.
Funds for 80 stalled projects approved
The special fund created in November last year to provide priority debt financing for the completion of stalled housing projects has approved over 80 real estate projects with an investment of Rs 8,767 crore that will enable completion of 60,000 homes, the finance ministry said.
These projects are spread across the country, including 27 in Mumbai, 26 in National Capital Region (NCR) and 10 in Bengaluru, it said in a statement.
Among these, investments in 18 have been given final clearance, however, money is disbursed to seven projects, it said after finance minister Nirmala Sitharaman reviewed the progress of the scheme -- ‘Special Window for Affordable and Mid Income Housing’ on Thursday.
The 18 projects include CCI Projects Ltd’s Revali Park in Borivali (Mumbai), Ramprastha group’s Primera in Gurugram, Naman group’s Andheri project in Mumbai, Ansal Housing’s Highland Park in Gurugram and Magnus’ Indrapuram project in NCR. The special window for funding stalled housing project was approved by the Union Cabinet on November 6, 2019.
LIC Housing Finance reduces home loan rate to all-time low of 6.90%
Mortgage financier LIC Housing Finance Ltd (LICHFL) on Wednesday said it has reduced interest rate to an all-time low of 6.90 per cent for new home loan borrowers having Cibil score of 700 and above.
LICHFL in a statement said the rate of interest for home loans up to Rs 50 lakh starts from 6.90 per cent for borrowers with CIBIL score of 700 and above.
For a similar score, the rate of interest is 7 per cent onwards for a loan above Rs 50 lakh, it said.
“Home loan interest rates are at an all-time low for the company and thereby resulting in low EMI payment. Attractive price points and affordable EMI will aid in addressing the demand side for buying homes,” LICHFL Managing Director and CEO Siddhartha Mohanty said.
Through this product, the company is trying to create demand, he told reporters.
In April, the home financier had cut its home loan rates to 7.5 per cent for new home buyers having a Cibil score of 800 and above.
Mohanty said there has been a softening of cost of funds after reduction in repo rates by RBI in recent months. The company’s cost of fund currently stands at around 5.6 per cent.
He said below 25 per cent of the company’s total book is under moratorium. Of its construction finance loan book of Rs 13,000 crore, around Rs 8,500-9,000 crore is under moratorium.
The housing finance company also launched a special home loan product, Griha Varishtha, for pensioners. The tenure is till attainment of 80 years of age or maximum up to 30 years, whichever is earlier.
This specially designed product caters to retired or serving employees of PSU insurers, Central/state government, railways, defence, banks, among others, entitled to pension under Defined Benefit Pension Scheme.
For higher loan eligibility, the applicant can also jointly apply with their earning children.
Additional benefits under this scheme include six EMI waiver for customers going for ready to move units or 48 months moratorium period for purchase of under-construction units.
Unitech board to complete stuck real estate projects in 4 years: sources
In a relief to 15,000 homebuyers waiting for possession of their homes for almost a decade, the Supreme Court (SC)- appointed Unitech board has submitted the roadmap for completing the stuck projects of the embattled firm with the apex court. It has proposed to complete the construction of all units within four years, sources privy to the case told Moneycontrol.
As per the resolution plan submitted last week, the board would require Rs 5,000 crore to complete construction of incomplete units.
A graded timeline for completion has been proposed. “All units would be completed within four years,” sources in the know said.
“The primary focus of the board is on completing construction,” they said.
The amount to complete construction would be raised by utilising additional FAR, disposing of land banks some of which are located in prime locations and money receivables from homebuyers. The board is also looking at raising finances from the SWAMI fund, banks and financial institutions, sources said.
“The board has also sought waiver of around Rs 5,000-crore interest and penalties charged by the Noida Authority, a reduction in interest rate from banks, and sale of some assets to raise funds to complete flats and villas,” they said.
As per estimates, Unitech owes Noida Authority around Rs 8,000 crore of which around Rs 5,000 crore is interest and penalties for delayed payment. The liability to banks is estimated to be around Rs 5,000 crore, with interest forming around 40 percent of the amount.
The embattled firm has unsold inventory of around Rs 3,000 crore and land worth another Rs 6,000 crore, sources said.
SC will hear the Unitech matter on July 23.
The apex court, in January, approved the nomination of seven directors to the board of Unitech, now being run by the government. The board was constituted on January 21.
It approved the names of members of the board which include A K Mittal, ex-CMD of National Buildings Construction Corporation (NBCC); Renu Sud Karnad, Chairman of HDFC Credila Finance Service Pvt Ltd; Jitu Virwani, CMD of Embassy Group; and Niranjan Hiranandani, Managing Director of Mumbai-based Hiranandani Group. Prabhakar Singh, Director General, CPWD was also appointed as a director by the court.