Summary of this article
Housing Ministry proposes four-month extension for developers.
RERA deadline relief for projects delayed by West Asia conflict.
This is proposed to provide relief after projects were affected by supply chain disruptions.
The Ministry of Housing and Urban Affairs (MoHUA) has advised all state Real Estate Regulatory Authorities (Reras) to grant a four-month extension to eligible real estate projects whose construction schedules have been disrupted by the ongoing geopolitical tensions in West Asia. This move is aimed at providing relief to developers who faced delays due to supply chain disruptions and shortages of critical construction materials caused by oil and crude shortages.
Classified As A Force Majeure Event
MoHUA has now asked state Reras to treat the West Asia conflict as a force majeure event in accordance with the Real Estate (Regulation and Development) Act, 2016 (RERA, 2016), according to a report in the Economic Times. Under this provision, regulators are allowed to extend project timelines when delays are caused due to extraordinary and uncontrollable situations, such as wars, natural disasters, or any other unforeseen events. Should the states implement this, eligible projects will receive an additional four months to complete construction without the imposition of penalties as a result of delays.
This recommendation was proposed after the government received several appeals from real estate developers’ bodies, including the Confederation of Real Estate Developers’ Associations of India (Credai), which has asked for a blanket extension of 3-6 months. The association argued that the disruptions in international trade have affected supply procurement severely, while also escalating their costs, which made it difficult for developers to adhere to the deadlines. The ministry accepted these concerns and described them as timely and necessary. Industry bodies say that this extension would help developers complete the projects without compromising on material and quality of the project.
However, this move has bothered homebuyers. Consumer groups have said that a blanket extension could lead to a delay in possession of homes for buyers who have already waited beyond their timelines set by the builder. Under normal circumstances, Rera is required to compensate the buyers for unjustified project delays. However, with the delays being designated as a force majeure event, developers will be exempt from such penalties.
Nevertheless, this advisory is not binding uniformly and automatically, as land and real estate regulations fall under the jurisdiction of state governments. Each state RERA is to decide the terms and clauses of this provision for builders and their projects. They will also have to check if a certain project is eligible for extension or not.
