Homebuyers will now be treated at par with banks and institutional creditors and will be given priority while recovering dues from bankrupt or insolvent real estate companies.
The Union cabinet on Wednesday approved promulgation of an ordinance to amend the Insolvency and Bankruptcy Code (IBC), whereby home buyers will be treated as financial creditors. This in turn will allow them to equitably participate in an insolvency resolution process and avail refunds from defaulting builders.
The home buyers welcomed the government's decision and lauded it as a step which will take care of their interests.
Sanjeev Singh, a home buyer said that the decision will surely provide relief to them as they will be treated at par with banks and institutional creditors and will be given priority while recovering dues from bankrupt or insolvent real estate companies.
Real estate developers’ body CREDAI has welcomed the move and said that it will protect the rights of the home buyers.
"It is a good move for the protection of home buyers’ money. RERA protects the money of buyers in an ongoing concern. Now the buyer’s investment is protected even in the case of insolvency. This will instill a sense of confidence amongst buyers of under construction properties. However, for continued flow of institutional and bank credit to the real estate sector, the system must uphold the superiority of a bank mortgage over any other claim otherwise banks may become hesitant in lending to this sector," says Pankaj Bajaj, President, CREDAI NCR.