The UP Rera deregistered 3 phases of a project in Noida. In effect, the developer, promoter lost their rights over the project, and the authority has taken over the construction of the project
Ashwini Kumar Sharma asked experts if it’s possible for homebuyers to take up such a task.
In a recent decision, the Uttar Pradesh Real Estate Regulatory Authority (UP Rera) deregistered three phases of a project in Noida. In effect, the developer and promoter of the project have lost their rights over the project, and the authority has frozen their project-related bank accounts and taken over the construction of the project. For the case in question, after deregistration, in accordance to the provision under RERA Act, the authority offered homebuyers the first right to get the project completed on their own. Ashwini Kumar Sharma asked experts if it’s possible for homebuyers to take up such a task.
Anshul Jain, Country head and managing director, Cushman and Wakefield India
The regulator must extend all support to the affected buyers
If the project is complete to an extent greater than 70-75% and buyers can organise themselves in a cohesive group delineating responsibility to individuals, they can take on the task of completing the project.
Self-completion is a difficult task but the buyers’ group can appoint a contractor or agency for completion and a professional agency for monitoring.
Meanwhile, the regulator must extend all support to the affected buyers. It should assist in the process of appointing the alternate agency and create a future roadmap in terms of accessing approvals in a more efficacious manner. This would enable it to be a smooth process for buyers to be able to complete the project on their own.
In case buyers express their inability, the regulator should be able to create an alternate solution. The precedent and the way forward on this will determine the future of many such projects.
Niranjan Hiranandani, National president, National Real Estate Development Council
Infusion of capital can solve the problem of stalled projects
Rera does not assume that those who have booked homes will have the technical skills and knowledge to complete the stalled or delayed project. It is possible for those who have booked homes in such a project to come together, form an association and hire a consultancy to get the project completed through a contractor.
Several stakeholders in Indian real estate have suggested a “one-time waiver" and “infusion of capital" by the government to enable real estate companies with stressed assets to complete stalled or delayed projects, since bankruptcy of the company will only result in larger losses to all stakeholders. In addition, it will create problems for the economy.
So, if a one-time waiver is carried out and an infusion of capital is done, the problem of stalled projects will be solved, and the question of whether it is feasible for homebuyers to complete stalled projects on their own will not exist.
Nimish Gupta, Fellow of Royal Institution of Chartered Surveyors (RICS) and managing director, South Asia, RICS
It can be a very difficult proposition for homebuyers
This question has arisen due to a few successful cases of homebuyers joining hands to complete stalled projects. However, in almost all those cases, the projects were very small and the group of individuals had some common connection.
Given the challenges of the unorganized processes in the real estate and construction industry, it is an extremely difficult proposition for homebuyers. The various challenges they have to deal with range from approvals to managing transactions, construction, supply chain and project completion and handover. There can also be issues related to leadership, mistrust, cash flow management and lack of dedicated effort by participants. Even seasoned operators struggle to ensure efficient management.
Should they still choose to do it, it is advisable that such groups employ professional practices and consultants to help complete the stalled projects.
Ramesh Nair, Chief executive officer and country head, JLL India
They may need to hire help to complete the stalled project
It is a gargantuan task to build a real estate project on your own. There are greater challenges in completing a stalled project. And if homebuyers are asked to complete the project, the risks remain.
Not only does it require expertise in the space, it also needs business acumen to finish the project. All aspects need to be taken into account, including approvals, product procurement, financing and legal sanctions. For projects with legal problems, constructing the project may be even more difficult.
Homebuyers may need to hire independent project managers and consultants, who can help them complete the project. But hiring a new workforce and getting the work done may incur additional cost.
Buyers also need to assess the stage at which the project is. One also needs to factor in the parties involved, the scale of the project and the investments required to restart from that particular stage.