LUCKNOW: In a major relief to the real estate industry, the Uttar Pradesh government on Tuesday asked the Noida, Greater Noida and Yamuna Expressway industrial development authorities to reduce the interest rates on land dues for builders and other allottees in view of the Covid-19 pandemic.
The three industrial authorities have also been directed to shift and defer the payments that have to be made by the property allottees, including those of 600 housing projects, factory owners, industrial and individual plot owners, said the official sources.
A senior official of the Noida Authority said the interest rates for all Noida properties would come down after the state government’s directives.
The decision was taken by the state government after consultations with the CEOs of the three authorities, days after the developers’ association, NAREDCO, promised jobs at construction sites for 2.5 lakh migrant workers.
The UP government directive came in response to repeated demands of relief by the developers in view of the huge business losses incurred due to the pandemic during which the construction activities had come to a standstill.
The state government had also received a 27-point representation from the NAREDCO and the CREDAI, the two active associations of real estate developers, recently seeking some relief.
Sources said Noida, Greater Noida and Yeida (Yamuna Expressway Industrial Development Authority) need to recover at least `35,000 crore in land dues from 600 housing projects and other property defaulters. This move will benefit nearly 400 Noida-based developers who dominate the real estate industry in UP.
According to officials, UP is the first state in the country to offer relief to developers in order to help them tide over the economic crisis caused by the pandemic and subsequent lockdown.
Credai, the other major developers’ association, said it would write to chief ministers of other states to extend similar relief. Several Noida-based developers have projects in other states.
So far, the annual interest rate on regular payments being charged by Noida and Greater Noida was 11 per cent, which would increase to 14 per cent in case of default. The amount was compounded bi-annually. For the Yamuna Expressway authority, the rates were 10.5 per and 13.5 per cent.
Presently, some of the defaulter builders pay penal interest on financial dues up to 20 per cent, thus, increasing the total default amount.
The state government has, therefore, asked authorities to levy simple interest on financial dues as per the marginal cost of funds based lending rate (MCLR) revised by the Reserve Bank of India, said officials.