The dent in new launches, the increasing number of indefinitely-deferred projects, and the persisting slowdown aggravating at a steady pace depicts a gloomy picture for Indian realty. The reliance on hefty loans has already led to a credit crunch in the system with the measures taken by the RBI not helping as much as they were expected to. In the back of the lockdown and the liquidity crisis, the fall in residential sales seems to be an obvious phenomenon. With the major metropolitan cities being worst affected by COVID-19; the vanquishing of housing demands looks even steeper. In the absence of a robust demand recovery proposal, the revival of the said sector seems to be far from reality.
How has the COVID-19 pandemic affected the relationship between tenants and landlords?
The disruptions brought in by the COVID-19 pandemic has led to all enterprises scampering to use their cash reserves and reducing payouts to minimise rental payments. The active endeavour of tenants has been to secure a way out to lawfully evade rental payouts for the entire duration of several versions of the enforced lockdown. To analyse this issue on the legal front; rent suspension can only be afforded in cases where there has been deliberate dispossession caused to the tenant, but not being limited to the premise.
Additionally, examining judicial response, calling aid from Force Majeure clauses within the Real Estate (Regulation and Development) Act, 2016, in the COVID-19 situation might not be of much help considering the vehement contemplation of the contract in that case. While tenants look for a way out to ease the burden for rental payments, a legal remedy for avoiding the same does not look much plausible.
How can cities improve their civic and transport infrastructure?
A hawkish eye on the realty sector shows various leakages with regards to property tax collection pan India. The lacklustre apparatus, minimal collection efficiency and flawed valuations lead to the divulgence of the funds which could otherwise have been well utilised for strengthening the civic and transport infrastructure of cities. Over the top, defaults and disputes in payment of property taxes are cosmic since ages. The outstanding amount of taxes due to pending disputes, if cumulated, can reinforce the industry immediately. Given the current downfall in the market, the wealth erosion, if not mended soon, could lead to an incredible amount of losses till the time the market recovers from the aftershocks.
How do you feel about the actions of the various Real Estate Regulatory Authorities during these times?
While market regulators such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have been working to mitigate the distress caused by the COVID-19 crisis actively, the various State Real Estate Regulatory Authorities have failed to, at the least, gauze a direction for easing the situation. Real estate developers, leaving homebuyers at their plight, have ingeniously manipulated the Authorities to bid outcomes in their favor.
The need for digitisation in contemporary times has become beyond essential. The incomplete website, rare and scattered project information and regulatory lethargy are the cherries on the cake, making it more difficult for homebuyers to make way for an efficacious remedy. The alibi of lack of powers is a bizarre argument from a regulatory body vested with statutory force failing to implement necessary provisions. The homebuyers’ community has been left in disdain by being at the mercy of the bungling regulators.
How do you perceive the foreseeable future of the real estate sector?
As the moratorium period edges towards completion, the real estate sector is getting apprehensive about many different aspects. Currently, the moratorium is only provided to banks and Non-Banking Financial Companies (NBFCs); capital market instruments availed no such benefits. The liquidity and funding challenges could worsen hereafter, as the demand-side pressure is expected to intensify owing to the economic fallout. With the demand quotient currently looking bleak, a persistent worry regarding an improvement in the number of property transactions in the coming quarters continues for real estate developers.