Noida, Greater Noida and Yamuna Expressway development authorities set to bring new exit policy to help developers and home buyers.
The three development authorities of NCR may soon bring new exit policy for realtors. As per new policy, builders those who have acquired land for a group housing project and not able to execute it for any such financial reason, may quit and get their deposit back, if they want to move out from the project.
Builders can surrender surplus land that is unused to the authority. This has been decided jointly in a board meetings and proposal on this is being prepared and will sent to Uttar Pradesh government for further approval.
Prashant Tiwari, Chairman, Prateek Group says, “at present, real estate is recovering from the slowdown phase and there are various factors due to which developers are unable to deliver their projects. Most adverse amongst them is slump in realty sales which is cutting down the developers funds. Due to such circumstances, developers have not been able to launch the new phases of their projects too. In many cases they have defaulted land payments to authorities also. The developers are happy with this exit policy as this will help them clear their financial liabilities and allow them to complete their existing projects.”
This new move has been welcomed by developers and home buyers. Exit policy will put positive shadow in real estate market, say realtors.
According to experts, new exit policy will change the sentiments of small developers and broaden their opportunities. Realtors with small capital will step ahead in the realty market and probably it will accelerate the supply of affordable homes in the market.
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It was an old demand by the developers asking iteratively for exit policy since developers were hit by the slump in the property market.
The new exit policy chiefly entails that:
- Suppose realtors bought hundred acres of land to construct a group housing project and they may have completed one or two phase of their approved projects, but current market situation is not favouring and they may not willing to take risk to launch another phase. The policy allows him to surrender the rest of the parcel of land to the authority and get back deposits.
- For instance, realtors owe dues of Rs 3,000 crore. If the new policy is implemented, developers can get rid of unused land can use the refunded capital in completion of their existing projects.
- Money will be refunded to the developers at land allotment rates only.
- The authority will refund 70 per cent of the deposit.
How will this move benefit builders and home buyers?
Big relief for realtors: After the sluggish real estate market in the national capital region what comes as consolation for realtors, if they are allowed to surrender these land parcels, they will be able to use the refunded money in a more productive manner to complete the sick projects. Even they can utilise the cash on their market planning to sell inventory.
Authorities hoping to gain more income: While the unsold inventories are piling up, local development authorities were also hit as their revenue collection has slowed down and halted overall infrastructure development in the region. To increase land allotment rates in the area is actually an intentionally taken risk to accelerate revenue collection. However, new exit policy will help authorities to generate substantial revenues and able to inject life into real estate activity in general by making productive use of vacant land freed by developers.
Home buyers benefit: In the past, there have been several cases when the buyers who have invested in housing project in NCR and possession dates have been delayed by the developer. In some cases, the builder fails to deliver the project in specified timeline due to financial stress. This has nearly affected lakhs of home buyers who booked flat in Noida. Now with the enforcement of exit policy, builder can complete the project which is nearing completion and can give possession of flats on time.