Noida to allow payment of lease in 4 instalments
NOIDA: In a major relief to homebuyers and developers, the Noida Authority has allowed lease on its property for group housing projects to be paid in four instalments instead of lump-sum. The decision is subject to a final approval by the authority’s board scheduled to meet on January 18.
Most developers, citing financial crisis amid the Covid-19 pandemic, had been unable to pay their lease. The latest move is expected to help them and fast track registries in cases where they had been stuck due to developer not paying the lease, said officials.
“The move allows developers to become eligible to execute the registry of flats in ready projects for homebuyers. If the lease is not paid, the authority cannot issue permission of execution of registry. It is a one-ofits-kind decision that will impact the realty sector positively,” said Rajesh Kumar, officer on special duty of the Noida authority.
Officials said the decision was taken after homebuyers complained that developers were not executing registries due to paucity of funds.
“We took the decision after realising the problems faced by homebuyers. The decision will be sent for a final approval in the authority’s board meeting on January 18,” said Kumar.
The confederation of real estate developers association of India (Credai), an umbrella body of realtors, welcomed the move.
“The authority charges 1% of the total property cost as lease rent for a year on residential properties, and to obtain registry permission, we need to pay lease rent for 15 years. Paying the lease rent in parts will help the sector, particularly homebuyers,” said Subodh Goyal, secretary of Western UP wing of Credai.
There are at least 10,000 apartments ready for registry in the city, said authority officials.
“We are happy that the authority has allowed payment of lease rent, which will hopefully pave the way for registries to be executed,” said Sachin Sharma, a homebuyer.
How lease calculated
The authority allots land to developers on a 90 years’ lease that are percentage of the property cost – for residential, it is 1% and for the rest, it is 2.5%. - and is charged annually.
Land cost is calculated on the basis of allotment rate, which is the price at which the government allots land to a buyer or builder.
For example, if 500 apartments are built in a group housing project on 10,000 square metre of land, then the land cost (as per the allotment rate) would be ₹500 crore. Each apartment owner will have to shell out 1% of the land cost as lease rent. This would imply that for such a project, the lease rent would be ₹5 crore per annum, or ₹75 crore for 15 years, to be paid in one go for permission to allow registry for homebuyers. However, now, the builders would be able to pay this amount in four instalments, which would be less financially burdensome.