Credai –MCHI reports about 65% of home buyers defaulting on installments.

The coronavirus disease has had a crippling impact on the real estate sector with approximately 65% flat buyers defaulting on installments since last week, said Credai -MCHI, the apex body comprising more than 1,400 builders in the Mumbai metropolitan region (MMR).

Worse, there are also reports of the closing down of malls that retail stores will stop paying rentals to mall owners. It, in fact, would have a cascading impact because store owners cannot repay their loans to banks.

“Since June 2019, on average 25-30% flat buyers of any project have failed to pay installments on the due date. Furthermore, since the emergence of the COVID 19 pandemic, the condition has become serious with about 65% of customers failing to pay their construction-related installments,” said Credai-MCHI. Across the MMR there are 10,200 residential projects listed under the housing regulator, MahaRERA, with a construction area of around 50 million sqft.

“It’s a gloomy condition and will cause the sector to crash absolutely,” Credai-MCHI president Nayan Shah told. “The input we got from our members after the coronavirus danger is disturbing. If consumers don’t pay us, how will we pay back our lenders?”

Credai-MCHI said that it anticipated all building operation to stop over the next two to three weeks, as flat buyers virtually stopped paying installments. “Flat buyers are expected to pay installments dependent on construction-related milestones under RERA. But, owing to prevalent uncertainties, they are deferring payments. If the Covid-19 condition continues to exist, 80 lakh citizens in the industry would be impacted,” it added.

Credai-MCHI has urged the state government to suspend property tax and payment of different incentives to the BMC without interest for one year. “All rates owed to BMC and the state government will be lowered by 75% for five years and 0% stamp duty on all new flat purchases for the next six months so that the public can be encouraged to purchase the new homes,” he added.

The decision of the government to close down malls and multiplexes has created severe problems too. Shoppers Stop, the anchor tenant in Dynamix Mall at Juhu, has written to the mall owner, YJ Realty and Aviation, member of the DB Group that it will not pay its license fee for the next three months in what is seen as a launch of the crisis in the retail sector. Shoppers Stop occupies 60,000 sqft in the mall and pays Rs 70 lakh monthly rent.

A DB Group spokesperson said, “If the rent is not paid, then we cannot pay our loans, also can’t pay property tax or salaries to our employees. Human suffering is horrific.”