Noida Authority Brings Good News For Home Buyers, Developers

Noida home buyers, who have long awaited the possession of their under-construction properties, have a reason to cheer. The Noida authority recently decided to issue no-objection certificates (NOC) to developers on a pro-rata basis. This will enable developers to give part-possession of their housing projects. In a recent meeting with Uttar Pradesh Chief Minister Akhilesh Yadav, developers had urged that measures be put in place to assist the cash-strapped sector.

The maths

Under the new policy, a developer will be issued an NOC for a part of the developed area, in the ratio of the cleared dues, after retaining a margin of 10 per cent. This means that if a developer has repaid Rs 40 crore of the Rs 100 crore he owes the civic body, he will be allowed to grant possession of residential units worth Rs 36 crore, leaving the 10 per cent margin of Rs 4 crore.

How will this help?

• According to a recent PropTiger DataLabs report, at 101,384 units, Noida was among the three cities with the highest inventory in the January-March quarter of 2015-16. (The report analyses nine major cities of India — Ahmedabad, Bengaluru, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune.) The report also shows that despite a year-on-year price fall of over two per cent, home sales in Noida have not appreciated. Apart from stalling several housing projects in the city, this has also added to the financial woes of developers, who are reeling under a liquidity crunch. The latest move will, thus, open up an avenue for developers to collect funds and carry on with the construction.

• Noida's real estate is primarily known for its affordable housing, and most buyers who have bought their houses in the city are from the middle class. Now, for people who have taken loans for under-construction properties and are still paying rent for the place where they live, the financial burden is colossal. The pending possession of houses has led to much agitation among home buyers.

• In terms of ease of doing business, Uttar Pradesh does not figure anywhere among the top performers. This is among the reason why Noida saw fewer unit launches in the fourth quarter. According to the DataLabs report, from 6,930 in the fourth quarter of FY15, new launches plummeted to 3,366 in the same quarter of FY16. Decisions such as the recent one will certainly help the civic authority improve its image, and be instrumental in attracting more investment to the city.