I had the chance of meeting an old friend and currently a lawyer in Noida Authority's panel. Discussed many things and possibilities, which mainly are suggested by the lawyers but formulated, implemented and executed by the bureaucrats. (Please don't ask me about the details since most plans are confidential and mostly contingent - not sure will take place or not, my lawyer friend only told me what was within the limits of professional ethics)

NA is of the view that in present circumstances, keeping in view the upcoming judgements of the HC and the current farmers agitation and politics, there are going to be fundamental changes in the policies of NA, which will set the course for the market in future. All projects, including current and future, will be effected.

Current Builder Projects will bear the most brunt. The reason: Unpredictable charges on the way to the current buyers in under construction projects. (All those flats, under construction, even constructed but awaiting registration (Once registered you are a free bird), will be affected with the new policies under way of formulation).

Legalities first: as you know most of the Noida land is under litigation, and bone of contention is the compensation amount to the farmers. In the present scenario, there are 100% chances that the court is going to appoint an arbitrator to determine the compensation amount for all the farmers land, acquired and under construction. (Future land acquisition will be directly by builders through negotiated rates with the farmers, as already disclosed by Mayawati in Lucknow today).

Well, once compensation is decided, who is going to pay the farmers? Noida Authority? NA doesn't have that money? Builders directly or buyers through builders? Not legally possible and enforceable! NA cannot enforce the builders to pay the extra money: plots are there to keep once sold. Buyers are technically third party to the authority in the lands deal, and cannot be approached for the purpose. Builders, in turn, also cannot enforce buyers to pay for this specific purpose.

What lies ahead (as a solution) is what is commonly known as EDC (External Development Charges). Future projects in Noida will automatically fetch the EDC because of the new policy.

But here, the current buyer, for which the EDC was not a factor till now while buying the flat, will have to shred the EDC money before taking the possession. This is the only solution which NA is eyeing right now to compensate for the extra money NA needs to pay the farmers.

NA would have loved to ask the buyer to pay the farmers the difference proportionately, but as said before, it is legally just not possible.

Logically, EDC should not be enforced by the NA to the buyers in current projects, since the Authority has already taken its development share, but it is the easiest and most viable LEGAL solution for the NA to do this "vasuli". Remember in BBA agreements that "all government charges which may change will have to be bourne by the buyer" in different languages but crertainly in all agreements. This is an enforceable clause and cannot be disputed with. Some builders oversmart lawyers went to the extent of including the farmers compensation clause also in the BBA, but that clause is not legal and enforceable.

So, just be ready to shred considerable amount of extra money for your purchases! Here, don't go by the calculations of Gurgaon. Percentage in the existing cases will be different and in the cases of the future acquisitions, it will be different. Noida Authority will attempt to squeeze the all losses through current buyers only. Be ready to pay an extra 20 - 25% in your current projects.

Those who have already bought are trapped, they cannot escape. Future buyers (only when EDC enforces officially) in NOIDA will have an advantage, and can get the deals at less than what the current buyer will pay, since builders may have to adjust the rates as per market forces. (I wouldn't buy an underconstruction property in NOIDA by an average builder at the rate of 3400 + 800 EDC, I just can find a decent accomodation at that price in Gurgaon, which now looks heaven after experiencing NOIDA).

Wish all current Noida buyers and investors a good luck, and that includes me too!
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  • Originally Posted by sandelhi
    Mayawati parting with her money to pay farmers? Buddy dont you think it's the opposite of whats been happening.

    I think that if farmers are paid additional compensation then current buyers will have to foot a good part of that bill. Thats how India works. Agreed that a 30% jump in prices may not be possible, but a 200-300 EDC may be a reality in the making. Lets wait and watch.


    I agree mate...that currently its the opposite which is happening..however, its because these things did not come in limelight...Now when Media is there, other political parties are gazing at every possible opportunity, BMW will not mind to spend 10%-15% of what she has collected till now...only to recover it back, once she is through with the elections.

    What you said seems possible...200-300 psf may be there in the pipeline, however I personally dont see that happening. typically, if all of say NEW is already developed while buying the property there, for what is the EDC applicable? This needs to be justified...for YEW, yes, its may very much be a possibility, but in core Noida/NEW....i dont see the possibility.
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  • Originally Posted by SMJ2011
    Brilliant analysis of likely way ahead....one of the best in recent times...Thanks vkumar..

    NA has acquired land Rs. 800-850 per sq. mtr and sold to builders 10000 sq. mtr. So there is adequate buffer with Authority to pay extra to farmers. Any move by the Authority to extract extra money from builders/ buyers on account of extra compensation to farmers can be challenged on this ground, i suppose.


    Farmers want the extra money NOW.

    Authority will collect money from builders in installments spread over some 8 years. So there is significant income and liability mismatch for the authority, let alone the buffer.

    May be authority can change the payment plan for builders and force them to pay more installments upfront. But given that builders must have already paid big money as bribes, any change that hurts them will never be done.

    I believe projects affected by court orders will come to complete standstill and construction will be halted till the next year's UP elections and their fate will be decided along with the future of BMW.
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  • Originally Posted by Pradyot1315sqf
    One possible solution is authority may increase FAR to help Builders to pay extra money to farmers.



    Originally Posted by vkumar1
    It will just create the "Crossing Republics" all over Noida. I hope they do not do that!



    Authority did the same thing. I was correct.
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  • Originally Posted by Pradyot1315sqf
    Originally Posted by Pradyot1315sqf
    One possible solution is authority may increase FAR to help Builders to pay extra money to farmers.






    Authority did the same thing. I was correct.


    Good one!

    But wait for the court order. Another slap of additional compensation may still bring the EDC. Danger is far from over.

    btw, vkumar1 is still suspended. Too bad!!! :D
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  • Originally Posted by deepauls
    Good one!

    But wait for the court order. Another slap of additional compensation may still bring the EDC. Danger is far from over.

    btw, vkumar1 is still suspended. Too bad!!! :D


    Sir... in my opinion, Ek mail bhej do IREF ko, suspension hat jayega. IREF know your importance here in this forum.

    Real Estate India - Gurgaon - Noida - Delhi - Mumbai - Pune - Chennai - Property Discussion Forum - www.iref.in - Contact Us
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  • Originally Posted by deepauls
    Good one!

    But wait for the court order. Another slap of additional compensation may still bring the EDC. Danger is far from over.

    btw, vkumar1 is still suspended. Too bad!!! :D



    Not possible in my opinion at least for existing buyers.

    Builders can extract money by increase

    i) floors (utilize new FAR) and/or
    ii) flat rates.

    and authority will make money through builders.
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