Developers to get relaxation on penalty due against delayed projects.

The GNIDA has modified how it measures money owed by developers, requiring them to later pay penalties for delayed development. Cash-strapped builders can now seek funds from financial institutions or find bailout packages with this.

“We will give developers permission to obtain a mortgage from financial institutions as soon as they settle our core dues. Penalty on delayed construction will be imposed later. But, when the occupancy certificate is released, a committee must verify that all duties, including the relevant construction penalty, have been settled,” said Narendra Bhooshan, GNIDA’s Chief Executive Officer.

The premium for allocation of plots and rent arrears make up the majority of dues. In 2003 the Authority had begun allocating plots. Periodically, it has revised its time extension policy, which includes penal clauses for deferred construction. The Authority had charged upfront 10 per cent of the premium and the remaining money was payable in installments.

A monthly interest rate of 1-2 per cent would apply if a builder failed to complete a project in seven years. Since plots are handed out on 90-year leases, rent was also demanded by the Authority. It had given notices to builders that had not finished developments within the timeframe and had to compensate their dues with interest.

“This logjam contributed to a vicious cycle. It did not allow development activity on outstanding duties. Developers were unable to pay the dues as projects were halted because they did not receive any money from customers. The actual amount owed from developers is much less than what the Authority says. They raised this issue before the Authority and are happy that a positive decision was taken,” said Manoj Gaur, President of CREDAI (NCR).

Many regulatory bodies sided with the developers because, in many instances, the development failure happened as the Authority was unable to procure the land and offer it to developers on schedule.

In December last year, the State government directed that such builders be given incentives, like the zero-period, and sought authority to reassess the penal amount for construction delays accordingly.

Bhooshan said that during the evaluation, 35,000 to 40,000 units were found to be available if the last-mile funding could be secured by certain builders.

Near to 1.25 lakh of the 2.5 lakh planned units have not yet been delivered in Greater Noida. The Amrapali group planned about 42,000 of these flats.