Status as on- 06/04/2020
The Coronavirus pandemic has wreaked havoc over the Indian Economy. The restrictions over movement and closure of institutions through the imposition of nationwide lockdown have raised an alarming situation of financial distress and liquidity crisis. The most affected have been the real estate industry as both the demand as well as the supply side has been adversely affected.
The recent measures taken by MahaRERA authority to extend the completion deadline for projects by three months comes as a welcome step for the real estate industry. However, the proactive measure taken up seems to only cover up for the loss of the supply side element of the industry and not the demand side. The interest of the Homebuyers which comprise the demand side of the real estate industry must also be safeguarded to ensure the overall well-being of the industry. The possible repercussions of the nationwide lockdown from the perspective of the homebuyers must also be taken into consideration and the government should come up with a panacea for homebuyers too.
Impact over the Homebuyers
The RERA was enacted to protect the interest of the homebuyers by ensuring the on-time delivery of real estate projects. The restrictions imposed by the Indian Government on lockdown and introduction of ‘work from home’ policy have essentially left homebuyers in a bubble of uncertainty regarding majorly three crucial points.
Firstly, the applicability of holding charges during the period of lockdown as it will cause an undue pressure over the homebuyer to take over the possession in a situation when most of us are not even situation to step out of our houses.
The second one is the tax liability over external and internal development charges which will only result in burdening the homebuyer with financial liability in a distress situation.
Thirdly, Delayed payment charges on installments which may become due during this period.
Remedy/ Measures Required
The distressing uncertainty lingering around the outbreak of COVID-19 has a rippling effect on the homebuyers by weakening their purchasing power and their financial capacity. However certain counteractive measures, if taken by the government, will make sure that the interest of the homebuyers is safeguarded. The steps are as follow:
- The first major step in this regard would be to ensure that by way of notification it must be declared that no holding charges would be applicable for the period during which the lockdown persists.
- The second step would be to reduce the indirect tax liability in the form of cuts in the rates of Goods and Services Tax over Internal and External development charges.
- No, delayed payment charges should be charged if buyers make delay payments during this period.
Therefore, the above-mentioned steps should be taken at the earliest instance to ensure that the rights of the homebuyers are protected and the demand side element of the real estate industry does not succumb to sudden death. The battle against the COVID-19 is not only on the medical front but it has been brought to the economic front.
Disclaimer – The above article is based on the personal interpretation of related laws and relevant pronouncements. The readers are expected to take expert advice before putting reliance on it. For any clarification, please connect to the reader at firstname.lastname@example.org