Homebuyers urge UP govt to settle dispute between builders and authorities over land dues

Homebuyers have urged the Uttar Pradesh government to resolve the dispute between developers and the Noida and Greater Noida authority over calculation of dues as about 3 lakh homebuyers are waiting for the registry of the house.

It is estimated that Rs 40,000 crore is due to Noida, Greater Noida and Yamuna Expressway Authorities including premium, interest and penal interest against allotted plots on which real estate projects are in different stages of execution.

Developers have agreed to pay the dues but want the authority to reduce the interest on dues as in many cases dues have tripled due to high interest rate.

“Most of the homebuyers have paid the dues to the builder so the authority should allow the registry. The authority can come up with one time settlement scheme to settle dues,” said Abhishek Kumar, president of the Noida Extension Flat Owners Welfare Association (NEFOWA).

Developers said that authority can order an audit and charge developer as per the current market rate instead of charging high interest rate.

“For a developer who has purchased the land 10 years ago and has paid almost 80% of the amount, the dues has reached three times of the original land cost and almost double of the current land price. The authority should take a considerate move and the dues should not exceed the current market value of the land,” said Himanshu Garg, Director, RG Group.

RG group project went into insolvency and developer is ready to pay the dues till the time of petition getting admitted. The developers are also looking for waiving of interests during Covid-19 period.“Most of the projects in Noida and Greater Noida are feasible and can generate profit if the authority agrees to recalculate the dues. A one time settlement scheme on the line of Haryana government can solve the problem and help homebuyers in getting the flat,” said Mohit Arora, MD, Supertech Ltd.

Since the authorities insist for no dues certificate for releasing various approvals, completion certificates and registry permission and none of the developer is capable of clearing the dues and producing NDC, the approvals would not be available to them and the construction as well as process of completion and delivery would suffer setback.

The recent SC order had removed the cap of 8 per cent in case of delay in depositing land price by builders to the authorities and kept it in the range of 15-23 percent compound interest.

Developers of the region said that the delays in payment were also on account of events outside their control.

The reason for delay include, plots allotted to them not having clear titles, NGT order on Okhla Bird Sanctuary where it banned all construction activities, settlement of the farmers’ compensation issue that took an inordinately long time and access to plots and development of basic infrastructure such as electricity, as promised by the authorities, not materializing within the stipulated time.

As a result, developers had to defer taking possession of the land.

According to the developers, interest on the land premium is charged at 12% + 3% (compounding half-yearly), which effectively comes to 22–24%.

Many developers were not paying the dues, hoping that authorities would reduce the interest.

Developers had urged the state government to direct development authorities to charge interest on land dues at the marginal cost of the funds-based lending rate (MCLR) of State Bank of India.

The move would fast track the delivery of flats to lakhs of homebuyers in the state, as authorities were not giving occupancy certificates until the dues were cleared.

According to the Confederation of Real Estate Developers’ Associations of India (CREDAI) 190,000 units worth Rs 1 lakh crore are stuck in Noida, Greater Noida and Ghaziabad. In Greater Noida alone, at least 36 real estate projects are facing insolvency proceedings.