The Centre will soon issue an advisory to the states to extend the deadline for completion of real estate projects by six months and further up to three months, if required, in view of the COVID-19 pandemic.
In a statement, the Union Housing and Urban Affairs Ministry said the measure will safeguard the interest of homebuyers, who will get the delivery of their flats although with a delay of a few months, but it will definitely ensure the completion of the projects.
The ministry said in the prevailing circumstances, the primary objective is to address the concerns of homebuyers by ensuring a suitable regulatory relief to the developers for completion of projects, so as to create a "win-win situation" for all the stakeholders.
Earlier in the day, Union Finance Minister Nirmala Sitharaman said 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 real estate law RERA.
The relief will be given to all the registered projects under the Real Estate (Regulation and Development) Act (RERA) expiring on or after March 25, the date from which the nationwide lockdown to check the spread of coronavirus came into effect.
According to the statement, the ministry will issue an advisory to all states and Union territories and their respective real estate regulatory authorities to consider the current COVID-19 pandemic as "force majeure" (unforeseeable circumstances).
"The calamity is adversely affecting the regular development of real estate projects and extend registration of all real estate projects registered under RERA by 6 months and further up to 3 months, as per situation evolving in view of the COVID-19 pandemic," the ministry said in the statement.
The construction work of ongoing real estate projects was halted after the lockdown came into effect, leading to a reverse migration of labourers to their native places.
"Further, there was large-scale disruption in the supply chain of construction material, which adversely impacted construction activities across the country.
"It is also anticipated that construction activities in pre-monsoon could not be undertaken, which will further delay the construction cycle," the statement said.
Moreover, due to the impending monsoon season, followed by festivals such as Dussehra, Diwali and Chatth, the labourers are not expected to come back soon, the ministry said.
"It is clear that in such circumstances, work on the real estate projects will take quite some time to restart in full gear.
"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.," it said.
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, a lot of projects 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, it is vital to take remedial measures now to ensure that COVID-19 does not lead to a complete breakdown of the real estate sector, it said.