The Central Government last month had issued an advisory to the states to extend the deadline for completion of real estate projects by six months and further by upto three months, if required, in view of the COVID-19 pandemic. In a statement by the Union Housing and Urban Affairs Ministry, it was stated that the measures will safeguard the interest of homebuyers, who will get the delivery of their flats although with a delay of a few months, but it shall ensure the completion and delivery of the pending projects.
The Union Housing and Urban Affairs ministry has further stated that in the current circumstances, the preliminary objective is to address the concerns of homebuyers/consumers by ensuring a suitable and just regulatory relief to the developers for completion of projects, in order to reach a “win-win situation” for all the stakeholders.
The Union Finance Minister Nirmala Sitharaman has said that the deadline for completion of projects will be extended by up to six months, treating the coronavirus outbreak as an event of “force majeure” under the RERA law from the date the nationwide lockdown to check the spread of coronavirus came into effect.
Thus, in effect, the Union Housing and Urban Affairs ministry has asked the States and Union Territories and their respective real estate regulatory authorities to consider the current COVID-19 pandemic as an event of “force majeure” (unforeseeable circumstances). The calamity has adversely affected the regular development of real estate sector and its projects thereby extending the registration of all real estate projects registered under RERA by 6 months and further up to 3 months.
However, the stoppage of construction work of ongoing real estate projects during the nationwide lockdown has led to the reverse migration of laborers to their native places. Moreover, the Lockdown has also resulted in a large-scale disruption in the supply chain of construction material, which has also adversely impacted construction activities across the country. It is also suspected that due to the impending monsoon season, followed by festivals such as Dussehra, Diwali and Chatth, the laborers are not expected to come back soon. It is apparent that in these circumstances, work on the real estate projects will take time to resume.
The Union Housing and Urban Affairs Ministry has also said that In the absence of urgent remedial regulatory measures under Real Estate (Regulation and Development) Act, 2016 [RERA], there is also a possibility of many real estate projects getting stalled, leading to litigation etc. This will ultimately result in non-delivery of flats to the homebuyers who have invested their lifetime savings in their dream homes.
According to the statement made by the Union Housing and Urban Affairs Ministry, a lot of projects have got stalled in the past due to various reasons, leaving lakhs of homebuyers in a very difficult situation, where they were running from pillar to post for their booked homes.
Therefore, these actions were vital in order to take remedial measures beforehand to ensure that COVID-19 pandemic and the Nationwide Lockdown does not lead to a complete breakdown of the real estate sector.
-Nikhil Arya, Advocate
Senior Associate
