Developers that have seen the novel coronavirus outbreak aggravate liquidity crunch and worsen the prolonged slowdown have sought changes in the housing law, additional funds and relief in loan repayment to help them tide over the disruption.
“It is our request to kindly have all interest and principal repayments falling due over the next three months in case of real estate projects put off and recovered over the next nine months,” the developers' lobby wrote to the Ministry of Housing and Urban Affairs.
The Confederation of Real Estate Developers' Association of India, or Credai, also urged the ministry to include the Covid-19 pandemic as ‘force majeure' in the Real Estate Regulation Act, according to the letter. That will allow them to extend project timelines by a year without inviting penalties and benefit malls, multiplexes, spas and gyms in getting insurance.
Rising Covid-19 cases in India have forced the government to shut down malls and public spaces, cut staff in offices and curtail travel. That has hurt economic activity and threatens everyone from airlines to services providers. It's worsened the slowdown for the real estate industry that was struggling to recover from a series of setbacks, from demonetisation to a new housing law and a liquidity crisis.
Citing declining cash flows as buyers cannot fulfil commitments due to the financial meltdown, Credai also sought additional funds on the same terms as existing loans without additional collaterals from financial institutions to meet increased costs.
Other Recommendations
- Waive penal interest charges by banks and financial institution for a year or until such time as it takes for the pandemic to abate.
- Coercive measures for tax collection involving raids and survey be kept in abeyance for three months to help the sector to deal with Covid-19 crisis.
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