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The UP government lowers interest rates for builders in Noida on land debt.

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The UP government lowers interest rates for builders in Noida on land debt.

  • 19 Jul 2023

Developers and real estate organisations like Naredco and Credai applauded the decision, claiming it will greatly increase homebuyers' benefits and make projects more financially viable.

In light of the COVID-19 outbreak, the Uttar Pradesh government on Tuesday requested that the three industrial development agencies in Gautam Buddh Nagar lower interest rates on land dues.

Alok Kumar, Principal Secretary, Industries and Infrastructure Development, UP, informed the Noida Authority, the Greater Noida Authority (GNIDA), and the Yamuna Motorway Authority (YEIDA) of the decision in a formal letter.

Developers and real estate organisations like Naredco and Credai applauded the decision, claiming it will greatly increase homebuyers' benefits and make projects more financially viable.

The letter states that if payment is completed by June 30, "there will be no interest for delay on land dues which were to be cleared between March 22 and June 30."

"Simple interest (SI) will be charged to those who submit their dues due between March 22 and June 30 by September 30. According to the letter, this SI would be calculated from March 22 through the payment date.

According to the statement, simple interest will be charged by the relevant body on all fees paid between July 1 and September 30.

It continued, "Default interest will be applied on the entire period of delay if these dues are not cleared by September 30."

As stated in the letter, future land dues payments shall be made on the same day and in the same amount "as per lease deed" without modification.

The government has given Noida Authority, GNIDA, and YEIDA permission to charge interest on outstanding balances at MCLR (marginal cost of fund-based lending rate) +1% during the first round of relief. It is a huge relief for developers and will enable us to deliver projects to homebuyers quickly, according to R K Arora, president of Naredco UP and chairman of Supertech.

Pankaj Bajaj, president of CREDAI's NCR unit, stated that the official rate of interest on installments for allotments to builders was practically approaching or above 15 per annum.

"This rate of interest rendered the majority of projects in Noida and Greater Noida financially unviable due to the market decline over the last four years. In addition to putting the investment of homebuyers at risk, ill projects also put the Authority's paper receivables in doubt, he said.

He continued by saying that CREDAI had asked for a reasonable interest rate that was linked to the MCLR.

"The updated rate is roughly 9% annually. The economic viability of initiatives in this area is significantly impacted by this. In the end, it helps the homebuyer by ensuring delivery and making the projects healthier, according to Bajaj.

According to Ashish Bhutani, CEO of Bhutani Infra, the move has come at the perfect time. The delivery moratoriums were a huge comfort, and now that interest rates are falling, thousands of property owners will experience still more respite.

Developers would be able to concentrate on project delivery thanks to the interest deferment, according to Bhutani.

The action will provide much-needed assistance at this critical time for the industry as a whole, according to Manoj Gaur, MD of the Gaurs Group and Chairman of Credai's Affordable Housing Committee.

"This will lessen the burden on the developers; yet, property buyers will ultimately benefit. The decision will undoubtedly relieve the impacted developers, according to Gaur.

The decision, according to Ashok Gupta, CMD of Ajnara India, will lessen some of the load.

"Developers are already hard at work creating marketing plans and other operational details for the post-COVID-19 future. This official decision has been a relief," he continued.

The lockdown waiver of interest rate on authority dues, according to Vikas Bhasin, MD of SAYA Homes, will assist the developers in managing cash for actions that can speed up the sale process.

We hope that the sector will also receive further steps to lessen the strain, said Bhasin.

Mahagun Group Director Dhiraj Jain expressed his hope that the state government would also announce further measures, such as a relief package, for the sector.

"Real estate is an essential component of the national economy, and anything that supports this industry will ultimately contribute to a rapid economic recovery," he said.

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