The real estate sector in Delhi-NCR is currently witnessing a significant debate over the Uttar Pradesh Real Estate Regulatory Authority’s (UP RERA) new model format for possession letters. Both developers and homebuyers have voiced their objections, urging the authority to reconsider its stance. The controversy centers on the stipulation that developers can issue possession letters only after receiving occupancy certificates (OC) from the relevant authorities. This directive aims to protect homebuyers but has sparked concerns among stakeholders.
Key Issues with the UP RERA Model Format:
Developers' Perspective
Real estate developers argue that the new format disrupts the established process and emphasizes the deemed approval clause under RERA. This clause asserts that if an occupancy or completion certificate request is not addressed by the authority within a stipulated time, it is automatically deemed approved. This provision was designed to prevent project delays and financial strain on both developers and buyers.
Key Points from Developers:
Deemed Approval Clause: Developers stress that this clause helps avoid delays in obtaining OCs/CCs, thereby facilitating timely project completion and possession handover.
Project Hold-ups: The new format could lead to prolonged project delays if authorities do not issue OCs/CCs promptly.
Financial Strain: Delayed possession increases financial burdens on developers, impacting project funding and overall viability.
Homebuyers' Perspective:
Homebuyers express concerns that the new regulation may exacerbate existing issues. They worry that delays in obtaining OCs/CCs could result in prolonged wait times for possession, leaving them to bear the dual burden of rent and EMIs.
Key Points from Homebuyers:
Delay in Possession: The requirement for OCs/CCs before possession can delay the handover process, causing financial strain on buyers.
Deceptive Practices: Buyers fear that developers may compel them to sign declarations or indemnity bonds that absolve the developers of future claims, despite ongoing issues with the property.
Valid Demand Notices: The notification does not address whether demand notices accompanying possession letters are valid, potentially leading to situations where buyers pay the full amount without receiving possession.
UP RERA’s Rationale and Response:
UP RERA introduced the model format to create uniformity and transparency in the possession process. The authority has received complaints about promoters sending demand notices disguised as possession letters, which confuse buyers and include binding conditions. The new format is intended to clarify and streamline this process.
UP RERA’s Directives:
Model Format: A standard 'Offer of Possession' letter is now available on the portal, and any deviation from this format is not valid.
Clear Communication: Promoters must clearly communicate the completion status of the unit and any remaining work.
OC/CC Requirement: Possession letters can only be issued after receiving OCs/CCs, ensuring that the property is legally fit for occupancy.
Industry Reactions and Implication:
The Confederation of Real Estate Developers Association of India NCR (CREDAI-NCR) has reiterated the importance of the deemed approval clause, emphasizing its role in mitigating delays. The organization urges UP RERA to consider the practical implications of the new format and its potential to disrupt project timelines.
CREDAI-NCR’s Position:
Regulatory Adherence: Developers are committed to following RERA guidelines but stress the need for practical and efficient regulatory processes.
Impact on Buyers: The clause preventing combined demand and possession letters could lead to buyers paying in full without immediate possession, which CREDAI-NCR believes is counterproductive.
Conclusion
The debate over UP RERA’s model format for possession letters highlights the complex dynamics between regulatory authorities, developers, and homebuyers in the real estate sector. While the intent is to protect homebuyers and ensure transparency, the practical challenges and financial implications for developers cannot be overlooked. A balanced approach that addresses the concerns of all stakeholders is essential for the sustained growth and stability of the Delhi-NCR real estate market.
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