Interview: Property sales in Sep, Oct 2020 at par with the pre-corona levels:Rajesh Goel-NAREDCO
The sales momentum in the ongoing festive is quite high. Sales registrations of properties for September and October of the current year are at par with the pre corona levels. With corona vaccine quite possible early next year, the prospects of real estate industry next yeraare looking bright. In a candid exclusive interview with RealtynInfra.com, Rajesh Goel, Director General, NAREDCO talks about various aspects and issues. Here are the excerpts:
Q1) What are the expectations from the festive season this year? Will it be at par with last year?
Festive season brings with it lots of excitement and cheer. This year especially, people want to get over with COVID-19 and move on. With the step by step unlock announced by respective State and Central Government, it has helped to get the economy back on track. The positive interventions taken by Government has revived several sectors including Real Estate. E.g. The Government of Maharashtra had decided to reduce the stamp duty on housing units by 3 percent from 1st September to 31st December 2020. This was matched by numerous builders of NAREDCO, where they decided to absorb the remaining 3 percent stamp duty on housing transactions. Thereby the stamp duty for the customers had been completely waived off.
This has helped to increase the sales volume. The sales registrations for September & October 2020 are at par with the pre COVID levels. The latest data from Inspector General of Registrations and Controller of Stamps reveals that in Mumbai, the sales registrations in October 2020 were 7,929, compared to 5,811 in October 2019 pre-covid era. In Maharashtra, this year; October 2020 saw the highest number of registrations across the state. This has supported big way in getting the economy back on track.
We are hopeful that the number will improve further in rest of the festive season.
Q) What are the expectations from 2021?
We are hopeful that 2021 shall bring good fortune for every sector. Due to Corona, 2020 was a washout year across the globe, with countries, government and people focussing more on curbing the pandemic rather than economic activities and rightly so.
With the vaccination for COVID-19 expected early next year, the overall sentiments will be positive. In fact, the country’s largest home financier HDFC Ltd, saw the second-highest monthly loan disbursements in history. Mistry claimed that there are three reasons for the same:
- Home loan rates are at historically low levels.
- Some state governments like Maharashtra have lowered stamp duty charges.
- Some of the pent up demand for home purchases from the initial parts of the lockdown, is returning now.
He expects this enhancement in demand to give way to long-term demand. So overall the development and investment should improve significantly.
Q) When can we see consolidation in the Indian real estate industry in a major way and how bad/how good will it be?
The Real Estate industry in India has already gone through the slowdown and the ongoing Coronavirus pandemic had further exacerbated the situation. COVID-19 pandemic had brought the construction activities to a grinding halt. There has been major labour Reverse Migration resulting in shortage of labour for construction.
However, all of these are now things of past. After, this tough phase, real estate sector is now witnessing signs of growth and renewal. We are seeing green shoots due to combined effort of government and Industry. For example, October sales in Mumbai were the largest in any month in this year and around 30 percent more than October sales last year.
People have realized the value of home in COVID 19, when they were forced remain in house due to lockdown. It has given boost to work from home culture and this is expected to continue. So, the overall perception of consumer to look at this sector has changed significantly, which will benefit the sector in near future.
Q) What are the changes required from the governments’ side (regulations) that will remove bottlenecks and give further boost to the sector?
Government has taken several positive measures to uplift the sector, however still following bottlenecks can be removed to further give boost to this sector:
1 NHB, vide its Policy Circular dated 19th July 2019, has prohibited the Subvention Scheme (where the interest is borne and paid by the developer till the date of possession). We suggest that the said circular be withdrawn since the customer of affordable housing homes cannot afford paying EMI and also the rent till he gets possession. Subvention scheme also addresses the issue of interest loss due to delayed possession.
2 One Time Restructuring: Recently RBI permitted the restructuring with a caveat that banks can only restructure loans of borrowers that were regular in their repayments and did not have over 30 days of overdue as on March 1, 2020, and their asset classification had not been downgraded to the level of a non-performing asset. This means that the units must not have overd ues as on 1st March 2020. As such, the benefit of the restructuring is not available to those units. This will make the benefit unavailable to most units. We suggest that the requirement as regards the unit being standard unit should be done away with and restructuring be permitted to all the units as per the mutual agreement with the financing enterprise and the borrower.
3 To address the grievances that the customer may have, he has several remedies to seek legal relief. With the introduction of RERA, the jurisdiction of Civil Courts has been barred in case of disputes between the developer and the customer. However, he still has the option of approaching the RERA authorities or Consumer Forum or the NCLT. As a result in respect of delayed project, the developer has to fight and pursue his case in all the three fora. We suggest that to avoid multiplicity of the litigation, the jurisdiction of Consumer Forum to adjudicate in the real estate matters be barred. Individual flat allottee shall not be permitted to approach NCLT for the grievances. However, in all fairness, if more than 2/3rd of allottees give their consent then the matter may be referred to NCLT.
4 MOEF Approvals :The whole process of MOEF Approval takes almost 9 – 12 months. Even small changes to plans require revised approvals, where the process has to be repeated. Changes in building footprint and its configuration are part and parcel of normal life cycle of any large building construction project which are influenced by changing market conditions.
My suggestion are as follows:
1 MOEF approval be allowed on conceptual building plans otherwise it has to wait for plan sanction before final approval.
2 Changes of plans within specified limits of the sanctioned built-up area say 10 percent without impacting environment criteria’s such as water consumption, sewerage generation etc. should be permitted, without going through the whole process.
3 Such mid execution changes also require compliance report from Regional offices which adds to time line, which is either way a duplication as the same is checked by the Corporation / Local governing Body before Occupation certificate.
4 The issue of increasing threshold for MOEF Approval from > 20,000 SQM to over 150,000 SQM and also of merging the Pollution Control Board’s approval of Consent to Establish, have been challenged in the Delhi HC and stayed. These cases need to be expedited.