COVID-19 Economic Package: Real estate sectors hail Sitharaman's move to extend RERA deadline

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Finance Minister Nirmala Sitharaman on Wednesday rolled out the Rs. 20 lakh corore stimulus package, known as 'Atmanirbhar Bharat Abhiyan' which is aimed at spurring growth and building a self-reliant India.  Addressing a presser, Sitharaman said all real estate projects registered under the Real Estate Regulatory Authority (RERA) expiring on or after March 25 will get a six-month extension as the lockdown to contain the COVID-19 pandemic stalled work.

The Finance Minister said, "Treat COVID-19 as ‘force majeure’ under RERA. Extend the registration and completion date, suo motu, by six months for all registered projects expiring on or after March 25 without individual applications. Regulators may extend this for up to three months more, if needed," she said. 

Sitharaman’s decision to extend RERA-imposed completion deadlines on real estate projects, has been hailed across the real estate sector. 

"Ensures homebuyers trust and grants breather to the developer’s fraternity," says 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 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.

"This would de-stress developers and ensure on-time completion of projects," Manju Yagnik, Vice Chairperson, Nahar Group and Vice President, NAREDCO

This would de-stress developers and ensure on-time completion of projects. Besides, liquidity push for NBFCs, HFCs & MFIs & credit guarantee scheme worth Rs 45,000 cr for NBFCs has been introduced which will help housing sector. 25% Reduction in TDS on rent till March 2021 and extension of assessment getting barred from March 2021 to September 2021 would leave more time for home buyers to plan better financially. Also, the change in classification period in NPAs from 90 days to 180 days would prove beneficial for developer and home buyers in the current scenario. If Government works out ways to iron out issues wrt to restarting construction in non-containment zones with necessary precaution & supply – chain, it will help sector in a big way.

"Meaningful step and directed in sheer interest of the industry," Ram Raheja, Director, S Raheja Realty

 
We welcome government’s stimulus boost to spur growth and build towards a self-reliant India. The Rs 75,000 cr liquidity boost for NBFCs is a meaningful step and directed in sheer interest of the industry. These steps will help ease the liquidity concerns for the real estate sector as the strengthening of the NBFCs to lend will in turn enable liquidity flow in ecosystem. Any measures directed towards the stimulation of real estate sector will inturn benefit 250 other industries that are directly and indirectly linked to this sector and  ultimately  help in revival of the economy. Additionally, in relief for the sector, a force majeure relief under RERA has also been provided to real estate developers and suo moto extension of 6 months have been provided for the projects registered on or before March 25. This will help towards timely completion of projects. Overall, we see this as a positive move.

These measures will go a long way in instilling confidence in banks, financial institutions and investors,"Dr. Joseph Thomas, Head of Research - Emkay Wealth Management
 
The announcement made by the Finance Minister, the first in a series, contained several measures targeted at improving liquidity and credit flow into MSMEs and NBFCs and smaller businesses. This assumes greater importance due to the fact that it is these segments which have been adversely impacted due to the lockdown. These measures will go a long way in instilling confidence in banks, financial institutions and investors in supporting the sections of business which actually require aid and help. The measures are more of supply side and there is very little that is on the demand side.