Govt relief to developers: Homebuyers may end up paying additional interest2 min read . Updated: 13 May 2020, 07:16 PM IST
- With job losses and salary cuts happening across industries, many homebuyers are struggling to pay their equated monthly instalments (EMIs).
In order to provide respite to developers struggling to complete their projects due the covid-19 pandemic, the government on Wednesday extended the deadline for registration and completion of projects under the Real Estate (Regulation and Development) Act, 2016 by six months. This is for projects, whose deadline is expiring on or after 25 March, 2020.
Even as the move provides relief to the developers, the extension of the deadline for the completion of projects may also mean extra interest burden for homebuyers, as they will have to continue servicing their home loans for this extended period as well as pay rent as their wait for home gets longer.
“The government has basically legitimised the delay even if the delay may not have been necessary on the account of covid-19. There is no clarity whether the homebuyers will be able to correspondingly delay their payments to developers. The homebuyers will have to continue paying EMIs and rent during this period," said Gaurav Gupta, CEO, MyLoanCare.in, an online loan market place.
With job losses and salary cuts happening across industries, many of the homebuyers are struggling to pay their equated monthly instalments (EMIs). The Reserve Bank of India (RBI) has allowed a moratorium of three months on term loans, including home loans, but that only allows deferment of payment of EMIs. There is no relief on the interest part. In fact, those who have opted for the moratorium, the interest burden will go up as the tenure of the loan will get extended.
The government has also said that the authorities can provide an extension of three months if needed. Covid-19 will be treated as Force Majeure under the Rera Act as per the announcement. Force Majeure is a provision under Rera, which gives extra time to developers to complete projects in case of events beyond its control.
However, homebuyers feel that the government should have provided some relief to them as well.
“Force Majeure was not required. The extension of deadlines should have been limited to the lockdown period," said Abhay Upadhyay, President of homebuyers body Forum for Peoples' Collective Efforts (FPCE).
We have written a letter on 11 May to Hardeep Singh Puri, minister of state for the ministry of housing and urban affairs and chairman of Central Advisory Council, Rera demanding that Force Majeure should not be allowed, added Upadhyay.
“Homebuyers are also suffering, as they will continue to pay interest on the loan. Their extra interest due to this extension should be either waived off or shifted to developers," he added.