TLI Staff
New Delhi: In major relief to lakhs of aggrieved homebuyers, the Centre has decided to pump Rs 10,000 crore as last mile funding to complete stuck housing projects.
The move is set to help 1,600 grounded projects and benefit 4.58 lakh homebuyers waiting for the keys of their dream homes for years.
Following the approval of the booster dose for realty sector by the Union cabinet, Finance Minister Nirmala Sitharaman on Wednesday said that the proposed Special Window would ensure delivery of homes to a large number of homebuyers.
This will, in due course, help relieve the financial stress faced by a large number of middle class homebuyers who have invested their hard earned money. This will also restore trust between buyers and developers and boost the sentiments of the housing sector as a whole and release large amount of funds stuck in these projects for productive use in the economy.
As real estate is one of the worst-hit sectors by the economic slowdown, the government has in the last few months announced a slew of measures to revive it. It had earlier announced in the Union budget to provide additional deduction up to Rs 1,50,000 of interest paid on loans borrowed up to March 31, 2020 for purchase of houses valued up to Rs 45 lakh. The government had also announced to lower interest rate on House Building Advance and linked it with the 10 Year G Sec Yields to encourage more government servants to buy new houses.
As per data compiled by real estate advisory ANAROCK, a total of 5.76 lakh units (launched in 2013 or before) across budget segments are stuck in various stages of non-completion in the top 7 cities alone.
A media statement after the cabinet meeting on Wednesday said that decision was taken on the basis of feedback received on problems faced by lower and middle class home buyers, whose houses may be stuck in NPA or NCLT projects.
“The Special Window will also cover projects that are classified as NPA or where NCLT proceedings have already started, but the project meets the other eligibility criteria,” it said.
The special window will get investments from institutions like LIC, SBI and others which will take the corpus to nearly Rs 25,000 crore. The fund will also be open to other sovereign funds to add to the corpus.
“The Special Window is being structured as an Alternative Investment Fund (AIF) to pool investments from other government-related and private investors including public financial institutions, sovereign wealth funds, public and private banks, domestic pension and provident funds, global pension funds and other institutional investors, etc. The fund is therefore expected not only to support the sector but also generate commercial return for its investors,” the media statement said.
The real estate sector hailed the government decision saying it will significantly help cash-starved developers to complete the unfinished projects.
“The vexed problem of delayed and stalled real estate projects appears to have found a solution, with the Hon’ble Finance Minister announcing Cabinet Approval of the scheme to provide ‘last mile funding’ for such projects, which she had proposed earlier,” said Niranjan Hiranandani, President, NAREDCO and MD, Hiranandani Group.
Rohit Poddar, Managing Director, Poddar Housing And Development Ltd concurred saying the funds will bankroll the stalled projects in the affordable and mid-income housing segment and keep the needle moving in the micro markets.
“It will also revive the demand for construction materials and assuage the stress in other major sectors in the economy,” he added.
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