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Amid a 21-day nationwide lockdown to contain the Coronavirus spread in India that has brought construction activity to a halt, the Maharashtra Real Estate Regulatory Authority (MahaRERA) on April 2, 2020, announced a relaxation on completion deadlines, in a move which will greatly help the state’s slowdown-hit developers. This means that a housing project that had set a completion date for, say, March 30, 2020, would not be charged any penalty for delaying the project till June 30, 2020.
Do note here that the government initially imposed a 21-day lockdown from March 25 to April 14. The lockdown was subsequently extended till May 3, keeping in the rise in infections. As on April 15, 11,439 coronavirus infections were reported in India.
MahaRERA announcement on deadline extension
In its April-2 announcement, the MahaRERA extended the validity of projects registered with it by three months, in case the completion date, the revised completion date, or the extended completion date expires on or after March 15, 2020. The Authority has also extended till June 30, all statutory compliances that were due in March, April and May 2020.
“Due to the lockdown, the supply chain for obtaining construction material has been disrupted and the workforce may have migrated back to their home states. Due to these circumstances, real estate projects across Maharashtra will take some time to restart work,” the MahaRERA said in a statement.
Builders welcome MahaRERA move
Developers and industry experts, who have been demanding the step in the wake of the pandemic, have applauded the MahaRERA move. “As the construction of properties has come to a full halt, owing to the lockdown to combat COVID-19, this has major ramifications on ensuring the completion of projects in the given timeline. This announcement will provide a major relief to home developers, as it provides the much required extra time for completion and delivery of the project,” says Rohit Poddar, managing director, Poddar Housing and Development Ltd.
“The government has given some respite to the sector, which will be feeling the impact of this lockdown. While we hope that this crisis will be over soon, steps such as these will help reduce the severity of the lockdown in the short term,” adds Shishir Baijal, chairman and managing director, Knight Frank India.
Housing inventory in Mumbai
Owing to a demand slowdown, builders with projects in the state, especially in Mumbai, have been under tremendous pressure in the past three years. Data available with PropTiger.com show that real estate developers in the Mumbai Metropolitan Region (MMR) are currently sitting on an unsold housing stock worth Rs 3 lakh crores.
“The impact of the pandemic on real estate was severe as the sector was already grappling with the liquidity crunch and the growing concern of rising unsold inventories across the country. It further added to the financial and sentimental stress on the sector,” Poddar, who is also the joint secretary, NAREDCO-Maharashtra, said.
According to Sharad Mittal, CEO and head, Motilal Oswal Real Estate, even after the lockdown is over, activity will recommence gradually, which will cause project delays of anywhere between four and six months at the least.
“While the MahaRERA move may not completely compensate the sector with the actual project delays that are likely to be witnessed, it is most definitely a decision in the right direction, to support real estate developers and the sector as a whole, in this global crisis,” says Mittal.
According to Niranjan Hiranandani, national president, NAREDCO, the Authority should offer more relaxation in the future, keeping in mind the fact that normalcy would return only gradually. “While these announcements take care of the immediate time frame and deadlines, the real estate industry hopes that any further delay, as a result of the pandemic, will also be taken into account and similar action will be initiated,” says Hiranandani.
Will COVID-19 delay projects in India?
Projects are set to be delayed, as construction activity has come to a complete halt due to a 21-day lockdown.
Has Maharashtra Real Estate Regulatory Authority announced relaxation on project delays?
Yes, the Maharashtra Real Estate Regulatory Authority has announced a 3 months’ relaxation on project delays.