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!
Read more
22 Replies
Sort by :Filter by :
No replies found.