Relief for real estate sector! Govt allows housing project deadlines to be extended by 6 months

In a major relief to real estate sector, the central government on Wednesday said it will advise state governments and Union Territories to extend the timelines of of RERA projects by six months.

"Ministry of Housing and Urban Affairs (MoHUA) will advise all States and UTs and their regulatory authorities to extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after March 25, 2020 without individual applications," said Finance Minister Nirmala Sitharaman while announcing the economic package for various sectors.

Amidst the adverse impact of the COVID-19 pandemic and the nationwide lockdown, real estate projects stand the risk of defaulting on RERA timelines, FM said, adding that "timelines need to be extended".

"Regulatory authorities may extend this for another period of up to three months, if needed," she said.

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The FM said the authorities are free to issue fresh 'Project Registration Certificates' automatically with revised timelines. They can also extend timelines for various statuary compliances under RERA concurrently, she said.

"These measures will de-stress real estate developers and ensure completion of projects so that homebuyers are able to get delivery of their booked houses with new timelines," she added.

"The move is expected to provide a much-needed relief to de-stress developers significantly since construction activity had been halted all across the country," Anuj Puri, Chairman, ANAROCK Property Consultants, said.

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In a bid to provide relief to contractors, Sitharaman announced up to six months extension for completion of obligations under highways, railways and other contracts. The move will provide relief to contractors impacted by the COVID-19 crisis.

"The extension of up to six months without cost to contractor is to be provided by all central agencies like Railways, Ministry of Road Transport & Highways and Central Public Works Department," FM said.

She said this covers construction works and goods and services contracts besides obligations like completion of work, immediate milestones and extension of concession period in contracts on public private partnership.

To ease cash flows, government agencies will partially release bank guarantees, to the extent contracts are partially completed, FM said.

Earlier in April, the Reserve Bank of India of had announced liquidity-easing measures to facilitate credit flow to the real estate sector. The central bank had allotted Rs 10,000 crore to National Housing Bank to improve liquidity in the sector.