Every sector is affected due to the Covid-19 pandemic and real estate is one of them. Rents were reduced in cities like Mumbai which is considered as one of the most expensive cities during the period.
Governments of different states are taking steps to boost the real estate sector. Earlier states like Maharastra, Madhya Pradesh, Andhra Pradesh have taken steps in this direction.
What is the “Zero period” in real estate?
During the period, due to any reason, if construction on land didn’t happen, then it is considered as a ‘zero period’
The zero-period policy specifies that if a housing project was stalled due to a stay order by any court or the National Green Tribunal (NGT), or if the Real Estate Regularity Authority (RERA) delayed possession of deed execution, then the affected period would be considered as ‘zero’.
Builders buy the land from govt. and agree to complete the project in stipulated time. But when due to any reason, the project gets stuck, and if the builder defaults on payments due to liquidity crunch or lack of funds, then additional penal interest is levied on the installments delayed. During a “zero period”, no interest is levied on land allotment charges.
“Zero period” is declared for interest on payment of renewal fee of license on delayed period, submission of fresh bank guarantee on account of grant of license and penal interest on payment of installment of external development works(EDC), state infrastructure development charges(SIDC) during this period, letter of intent/permissions/building plan approval/extension of change of land use (CLU) permission and licenses and renewal of licenses and related compliances.
Interest relief on pending dues is also given to builders along with time-bound compliances.
Expected benefits and Experts’ views:
It is expected that this step of the Haryana government will benefit the builders and will help in reducing their debts. Along with that, it can help in increasing the growth of the real estate sector. Earlier, the Uttar Pradesh government also introduced a “zero period” facility for builders along with some conditions.
During the Covid-19 pandemic, the construction of houses was on hold. So, builders are also having tough times as, despite work on hold, they had to bear interest and various charges, which are now waived off. It is expected that this step will help in bringing the real estate sector in the same condition as before Covid. People in the real estate sector have welcomed this step.
Santosh Kumar, vice president of ANAROCK property consultants believes that it would have been far more helpful if this benefit would have been given for a longer period. Government should also try to boost the sector by reducing stamp duty, control the price of raw material, and should bring investment windows according to Ankit Kansal, founder and MD of 360 Realtors.