Real Estate Developers Association Pleads to Reinstate Interest Rate Cap

The Confederation of Real Estate Developers of Noida and Greater Noida (CREDAI) has appealed to the Supreme Court of India to recall its November 2021 verdict, which cancelled the previous year’s order that capped the rate of interest on delayed payments by builders at 8%. The earlier order was issued by the Supreme Court in June 2020 and provided much-needed relief to builders who were facing financial problems due to the COVID-19 pandemic.

The controversy surrounding the rate of interest has been ongoing for the last three years. The Supreme Court had reduced the rate of interest, which was in the range of 15%-23%, depending on the terms of the contract, and capped it at 8% in June 2020. However, the Noida and Greater Noida authorities had sought a recall of that order, claiming that they would lose INR 75 billion due to the cap on the interest rate. In November 2021, the Supreme Court allowed their plea, recalled the order, and removed the cap on the interest rate. Now, the builders have moved the Supreme Court to seek the recall of the recalled order and the restoration of the 2020 order. The builders are currently feeling frustrated with the way the authority is dealing with the issue. Sunny Khandelwal, from Jalwayu Vihar, Noida Sector 25, who represents a prominent builder operating in Noida and Greater Noida told us that the real estate market was already in a slump for nearly a decade, although it has picked up in recent years, such regulations would make it extremely difficult for builders to operate and provide possession to end users at the right price and timelines. End Users have already raised complaints on the delay in possession of their flats and some have even filed FIRs in the Police station  against the delays. How are we expected to deliver their flats if we end up paying such hefty fines to the authority.  Similarly, Anand Ranjan, from Alpha 1 Greater Noida, who represents a large construction company in the area feels that such regulations would  cripple an industry that is already facing a crisis.

During the hearing, senior advocates Abhishek Manu Singhvi, Ranjit Kumar, and Shekhar Naphade, representing the builders, argued that the 2020 order was a well-reasoned order that was passed after due consideration, and there was no need to recall that order. Singhvi assured the court that any benefit accrued to the company due to the low-interest rate would be passed on to the buyers, and the court could monitor it.

The Supreme Court, while recalling its 2020 case, said that the matter was dealt with by the bench dealing with questions relating to the Amrapali Group of Companies. The court had erred in granting relief to projects other than the Amrapali Group of Companies. Therefore, the apex court allowed the Noida and Greater Noida authorities to charge interest as per the agreement, which is in the range of 15%-23%.

The court had capped the interest rate in 2020 to provide relief to the struggling builders during the economic slowdown caused by the COVID-19 pandemic. However, the court recalled its order in November 2021 after the authorities claimed that they would lose a substantial amount of money due to the cap on the interest rate.

The real estate sector in Noida and Greater Noida has been struggling for some time, and the cap on the interest rate was a welcome respite for the builders. However, the authorities claim that the cap will cause them to lose a significant amount of revenue. The builders have now appealed to the Supreme Court to restore the 2020 order and provide them with the much-needed relief they need to complete their projects and repay their loans.

In conclusion, the controversy surrounding the rate of interest for the real estate sector in Noida and Greater Noida has been ongoing for the last three years. The Supreme Court had initially capped the rate of interest on delayed payments by builders at 8% in 2020 to provide relief to the struggling builders during the pandemic. However, the authorities claimed that they would lose a significant amount of revenue due to the cap and requested a recall of the order. In November 2021, the Supreme Court allowed the authorities to charge interest as per the agreement, which is in the range of 15%-23%. Now, the builders have appealed to the Supreme Court to restore the 2020 order and provide them with the much-needed relief they need to complete their projects and repay their loans.

Farmhouse owners challenge Noida authority’s demolition order in Allahabad High Court

The Allahabad High Court has directed the Noida Authority to serve individual notices to farmhouse owners before demolishing their properties on the Yamuna floodplains. The court order came in response to the complaint filed by farmhouse owners who claimed that the authority had put up unsigned public notices on their properties, deeming the structures “unauthorized” because they did not have any sanctioned map. The Noida Authority had already demolished at least 130 farmhouses built without a sanctioned map.

Farmhouse owners are currently filing “urgent” writ petitions to protect their properties. The initial order, that was issued on June 16, addressed all parties to ensure status quo for 20 days till the authority directs the concerns of farmhouse owners. The Noida Authority issued a public notice on June 8 warning all farmhouse owners to face demolition because building any structure on the riverbed is unauthorized. The notice also warned potential buyers of such farmhouses not to get engaged with the developers and owners. The petitioners in the writ challenged the public notice dated June 8, 2022, issued by the Noida Authority CEO for demolition of constructions raised by them over a period of time on the premise that the petitioners had encroached upon the floodplain zone of Hindon and Yamuna rivers, construction over which is prohibited.

The Noida Authority officials stated that their counsel will file replies as directed by the court. The court also directed the authority counsel to furnish the circumstances under which they can demolish the buildings. The Noida Authority had warned farmhouse owners that building any structure on the riverbed is unauthorized and that they will face demolition. The Authority declared that landowners can only carry out farming activities on the riverbed and are not allowed to create any structure. Nevertheless, the farmhouse owners claimed that the Noida Authority did not serve individual notices before demolishing their farmhouses. Pradeep Saxena, a resident of Jalwayu Vihar Sector 25, Noida and an owner of a farmhouse, on condition of anonymity, said that such farmhouses had existed over the past ten years, and it appeared as if Noida Authority was sleeping all this while. We will be filing a police FIR against the demolition and initiate a court case to recover our losses. Similarly, Anand Ranjan, a resident of Sector 50 Noida, who owns two farmhouses in the region added that he did not receive any news or individual notice before his farmhouse was demolished. Raman Singh, also an owner of a farmhouse and a resident of Punjabi Bagh, Delhi said that rules for such farmhouses are grey and many investors had little knowledge in there legal status.

The Allahabad High Court instructed the Noida Authority to provide individual notices before demolishing the farmhouses built on the Yamuna floodplains. The court also instructed the Authority counsel to furnish the circumstances under which they can demolish the buildings.

Gautam Buddha Nagar Administration cautions against Illegal Plots near Jewar airport

The Gautam Budh Nagar district administration has warned people against fraudulent real estate agents trying to sell small land parcels in six villages near the upcoming Noida International Airport in Jewar. The officials have found out that after the news of Jewar Airport, many agents are illegally selling small plots of land ranging from 10 to 50 square metres by enticing buyers with the promise of government jobs or free plots once the land is acquired. The officials have already identified 908 such agreements till February and anticipate many more since then. When we spoke to some real estate agents regarding the issue, than Rajesh Bhatti, a prominent real estate agent in various sectors of Noida such as Sector 50, sector 75, sector 100, sector 25 (Jalwayu Vihar), sector 122, etc. told us that such practices have become extremely common in the area and many innocent buyers are becoming swayed by these offers which are too good to be true and may lose there hard earned money. His colleague, Anand Ranjan added that the number of such agreements are likely to be significantly higher than the ones claimed by Noida Authority.

The district administration has issued a notice to inform people of these fraudulent activities and has warned that people indulging in these activities will not be eligible for rehabilitation and resettlement benefits. The administration is investigating the matter and plans to take strict legal action including filing a police FIR against the agents to prevent outsiders who are not from the affected villages from exploiting the locals. The district administration has also requested people to file complaints and inform them about any such sellers through email or the ADM’s office.

The government will acquire around 1,185 hectares of land from six villages for the airport, and the district administration has already issued a public notice under Section 4 of the Land Acquisition Act. The officials can now begin their surveys and mapping to calculate the number of affected people, their families, and the compensation amount that will need to be disbursed.

For the first phase of the airport, the government acquired 1,334 hectares of land, and the affected families were provided with compensation at the rate of ₹2,300 per square metre, and they were also offered additional benefits. The government provided compensation against assets such as trees, borewells, and permanent constructions on the land being acquired, and every youth over 18 years of age in the affected families was assured either a job at the Noida International Airport Limited or a one-time grant of ₹5.5 lakh or ₹2,000 every month for 20 years.

To ensure a smooth process of land acquisition, the state government offered additional benefits to the farmers. The government disbursed ₹3,066.8 crore as compensation and rehabilitated 3,627 families by giving them plots in a township being developed in Jewar Bangar village.

In conclusion, the district administration has warned people against fraudulent activities and is investigating such cases where small plots of land are being illegally sold to outsiders. The officials have said that court cases will be registered against the accused and have urged people to inform them about any such sellers and have reiterated that only the landowners and families who are being displaced or whose livelihoods are being affected will be eligible for rehabilitation and resettlement benefits.

Good Times For India’s Luxury Real Estate Market

India’s luxury real estate market is currently experiencing strong growth.  According to estimates, the majority of High-Net-worth Individuals (HNIs) and Ultra High-Net-worth Individuals (UHNIs) are looking to purchase luxury real estate during 2023-24. According to a latest survey,  around 60%-70% of respondents were interested in properties priced between ₹5-10 crore, with around 30%-35% of them willing to pay more than ₹10 crore for the right luxury property. The prices of luxury properties have also appreciated by 8-10% over the past year across major cities and have exceeded the 2015 peak level.

The Indian luxury real estate market is currently in a multi-year bull run that began in 2021, after years of being subdued. Despite the rise in prices over the past 12-18 months, they are still only marginally higher than the peak prices of 2015, making it possible for HNIs to find well-priced deals. It was found that the key motivation for buying property in 2023-24 was a lifestyle upgrade, followed by the expectation of capital appreciation. Furthermore, it was found that 10%-12% of HNIs and UHNIs chose real estate as an asset class to create multi-generational wealth to pass on to the next of kin.

The top four cities in India to purchase luxury real estate are Delhi NCR, Mumbai, Goa, and Bengaluru. However, the survey also found that a considerable number of wealthy individuals in India are exploring real estate options in overseas destinations. The survey further revealed that over 50% of buyers prefer to buy luxury properties in city and urban communities, while approximately one-third are interested in owning a farmhouse or holiday destination. High-rise apartments are the most sought-after real estate investment option for the respondents, followed by farmhouse/holiday homes. Additionally, around 25% of the buyers are interested in rent-yielding commercial real estate.

It was also found that larger homes and open green spaces, combined with excellent physical and social infrastructure, were the top two reasons for wealthy Indians when choosing a property to buy. Additionally, nearly  four fifths of the luxury property buyers believe that real estate is an important asset to hedge against inflation. It was also noted that around one tenth of the buyers picked sustainable features as one of the key reasons driving their purchase, a positive trend towards environmentally friendly properties.

According to Anand Ranjan, a property consultant in sector 56 Gurgaon, housing sales remain strong amid pent-up demand and the country’s economic growth. “As the Indian economy continues to grow, we can expect more people to enter the rich class from the upper middle classes. This will drive the demand of luxury real estate in the country” Ranjan said. He added that a fundamental shift in the desire for homeownership across age groups has been observed post-pandemic, with a young, thriving workforce in India continuing to drive demand for the housing sector.  Kailash Sachdeva, a property Consultant Jalwayu Vihar,  sector 25 Noida also added that despite the rise in prices over the past year, they are still only marginally higher than the peak prices of 2015, creating opportunities for HNIs to strike well-priced deals. Sachdeva also highlighted that lifestyle upgrade and capital appreciation as the key motivators for purchasing property in 2023-24, while larger homes and open green spaces, combined with excellent physical and social infrastructure, are the top priorities for wealthy Indians when choosing a property to buy.

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