The plunging property rates and lowering of interest rates has not brought in more buyers to the real estate market. The unsold stock and taxation issues have resulting in a large inventory. The government had announced last month that it would provide a much-needed impetus to the struggling real estate market by offering relief measures. The package offered was Rs 20,000 Crores to rescue pending housing projects. In the fund, ₹10,000 crore will be contributed by the central government and roughly the same amount will come from outside investors.Home buyers saw this as a positive sign as many of them can now get delivery of their homes.
This relief package was offered to the ailing real estate industry as a way to boost it back to the path of revival. Currently there are estimated to be over 8lakh housing units in various stages of construction that are stuck across India’s prime markets. This funding for non-NPA and Non-NCLT projects would not only arrest the rise of NPA’s but also reduce the NCLT & RERA complaints overall. This might help restore some of the customer confidence. But most of [the real estate developers are not very happy as they feel the relief is too little with too many conditions.
While a few builders are not complaining about the amount of relief they are upset by the criteria under which this relief money would be allotted. Housing projects that don’t belong to the affordable or middle-income group category will not get any relief money, as the government has inserted a caveat to that effect in its terms and conditions. (Units priced below Rs 45 lakh are affordable homes. Also, there is no government recognised definition of middle-income group units, which has to be clarified before builders can start claiming the funds.)
For home buyers who have invested into companies like Amrapali, Jaypee, Unitech, and HDIL who have declared bankruptcy, there is no real relief. The legal issues under which these companies are spirally make them ineligible for the relief money. The government also acknowledged that this relief package would help only 3.5 lakh home buyers.
In order to see a true change in the real estate industry it would be important for more measures aimed not just at affordable sectors but across the board. The industry is expecting more from the government as this sector employs millions of unskilled and skill labour and is an important sector for development of the country’s economy.