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Real estate relief for stalled projects on the way: Sources
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SME Times News Bureau | 09 Sep, 2019
The real estate sector relief
expected this week may include solutions for stalled housing projects
for the stressed home buyers where projects could not be completed due
to funding issues, official sources said,
There have been demand
for as stress fund to deal with stalled projects and bail out lakhs of
stuck homebuyers from both home buyers and builders side. There will be
solutions on those lines , sources said without divulging if it would be
Rs 10,000 crore stress fund as sought.
Another official said
stressed fund do exist in many countries but owned by private sector
adding there are several ways to provide liquidity in the lendings to
the sector which is not necessarily through only a stress fund.
Stress funds are a global phenomenon and are present in nearly every mature market. But many of them are private funds.
In
August government announced more credit support to housing finance
companies where it extended additional liquidity support to HFCs by
the National Housing Bank, which has been increased from Rs 20,000 crore
to Rs 30,000 crore.
In her meeting with the sector
representatives, Finance Minister Nirmala SItharaman had met with the
two apex realtors' industry bodies CREDAI and NAREDCO, and the second
with homebuyer associations, to discuss the issues concerning the real
estate sector and steps to be taken to strengthen the industry.
The
government is also likely to make changes to the definition of
affordable housing as sought by developers so that more projects can
come under the category. Further, bank loans for developers, which have
always been an issue as banks try to avoid lending to developers, may
witness some favourable changes. Developers and distressed home buyers
had suggested to the government that a fund be set up for completion of
stalled projects.
Further, the real estate sector also received a
shock after the National Housing Bank recently asked housing finance
companies to stop funding under the subvention scheme. The government is
likely to ease the recent direction in favour of developers.
Last
month industry body NAREDCO had raised the need for a 'stress fund'
before Sitharaman. If the government agrees to float such a fund, it
could become the last-mile capital for large unfinished projects. Home
buyers' body -- Forum For People's Collective Efforts (FPCE) -- also
wanted Rs 10,000-crore 'stress fund' in budget to complete stalled
projects. Their view is it is time now to end this problem by creating a
�stress fund' to the tune of at least Rs 10,000 crore to complete
stuck real estate projects on pan India basis.
The real estate
sector is facing multi-year slowdown in demand due to various reasons
including tight liquidity situation, default by many builders and
elevated level of prices.
The industry is expecting the
government to address their concerns regarding liquidity crunch, demand
slowdown and stalled projects. Industry bodies have said that the
unrest in the sector is due to the of liquidity crunch and poor sales,
and demanded that banks and NBFCs should be encouraged to fund projects.
The industry fears bad situation during the coming festive season when
generally demand is higher.
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