Double Stress Fund for Stalled Affordable Housing: EY

With the number of 'stressed' real estate projects likely to increase due to the ongoing lockdown, global consultancy firm EY has recommended doubling of special stress fund to Rs 50,000 crore to provide liquidity to developers to complete stalled affordable housing projects. Last year, the government approved a Rs 25,000-crore special window to provide funding to nearly 1,500 stalled housing projects with the aim to revive the key sector, provide boost to economy and give relief to home buyers. The government has so far cleared Rs 540 crore worth projects and preliminary clearance has been given for due diligence in nearly 14 projects. "Cashflow planning and structuring of debt obligations are critical to tide over the current situation. This will require drawing out a crisis management plan and stress testing on cash position. It will also require close monitoring of projects, immediate discussions with lenders on post moratorium options and exploration of rescue/revival capital for stressed projects," EY India Partner and National Leader - Real Estate Gaurav Karnik said. Besides, EY also recommended a Rs 11,000-crore package for waiving interest on home loans taken for projects under Pradhan Mantri Awas Yojana (PMAY) for three months. "Solvency and liquidity support to the sector would ensure that the impact is not permanent. In this regard, government could immediately announce a three-month interest waiver for low-cost housing loans, such as under PMAY. As buyers of these houses are from the economically weaker section and low income households, a risk of mortgage default may emerge from their incomes being affected by the lockdown. "Interest waiver for a few months would help in both protecting the vulnerable households, maintain demand for low-cost housing developers and also ensure that bank and NBFC confidence in the low-cost housing segment remains intact," Karnik added.  Apart from this, the government can also permit GST paid on inputs in construction of commercial property to be paid as credit for GST charged on rentals, it said.