STOCKHOLM: In its biannual stability report released on Tuesday, the Swedish financial watchdog, Finansinspektionen (FI), issued a cautionary directive to commercial property companies in the country, urging them to curtail debt levels and fortify equity to navigate the challenges posed by elevated interest rates.

The Swedish property sector, which significantly increased borrowing during a period of low interest rates, now grapples with the twin challenges of soaring interest costs and diminishing property values amidst a decelerating economy.

FI emphasized that larger, publicly-listed commercial real estate firms should contemplate reducing their collective debt, currently standing at approximately 1,500 billion Swedish crowns ($143.68 billion). The watchdog proposed a debt reduction of around 100 billion SEK, averaging 15% per company, to brace for potential future rate hikes and value depreciation.

“In total, a debt reduction of about 100 billion SEK, or on average 15% per firm, is needed,” FI stated. “Many firms may need to sell a large portion of their property portfolio or raise capital by other means.”

Several real estate firms have already seen their debt downgraded to “junk” status by ratings agencies, reflecting the severity of the financial strain.

FI’s concerns align with those of the Riksbank, which recently urged high-street lenders to curtail dividend payments and share buybacks to build buffers against potential challenges in the commercial real estate sector.

While Swedish banks maintain strong capitalization, with the property sector constituting nearly half of business loans, memories of the 1990s financial crisis persist. The crisis, triggered by the commercial real estate sector, led to the nationalization of two banks, a three-year economic contraction, and a surge in unemployment.

Acknowledging the resilience of banks, FI asserted the need for them to retain substantial buffers in the face of economic uncertainties. The watchdog highlighted that households, grappling with the impact of higher interest rates, pose a risk of reduced consumption that could exacerbate the economic downturn and, consequently, heighten the potential for financial sector issues.

In essence, the call for Swedish property groups to recalibrate their financial structures reflects a proactive stance by regulatory authorities to safeguard against potential economic headwinds.

MUMBAI: The Bombay High Court supports BMC’s decision to issue an eviction notice for a Malad building deemed dangerous, giving occupants until December 31 to vacate. The court emphasizes the significance of structural integrity while upholding the eviction order, granting an extension but underlining the responsibility of occupants for the safety of life and property.

In a recent development, the Bombay High Court has affirmed the validity of the Brihanmumbai Municipal Corporation’s (BMC) eviction notice for a building in Malad, citing its classification as dangerous and unfit for habitation. The court, during its vacation bench session led by Justices Sharmila Deshmukh and S V Marne, ruled that the mere demolition of the building would not negate the alleged tenancy rights of the petitioners. Instead, they would be entitled to be inducted as tenants once the structure is reconstructed.

The BMC’s notice, issued on November 10, prompted the court’s decision, emphasizing the importance of structural integrity. The court granted an extension until December 31 for occupants to vacate, responding to a request from the petitioners’ lawyer. However, this extension comes with a crucial condition—the occupants must undertake full responsibility for any mishap that may cause danger or loss to life or property.

The legal proceedings were initiated by Panbai Gagri and others, challenging the November notice issued under Section 354 of the Mumbai Municipal Corporation Act 1888. The Ismail Baug building, located opposite Malad railway station, was flagged as dangerous, leading to the issuance of the eviction order.

The building, over 50 years old, underwent a structural audit earlier this year, and conflicting reports emerged regarding its safety. The court noted that the BMC guidelines do not exempt load-bearing structures from non-destructive testing (ND testing) for a structural audit. Despite conflicting opinions, the court emphasized that the petitioners could not be granted further opportunities for additional audits and upheld the BMC’s November 10 notice.

While affirming the eviction order, the court directed the BMC to measure each occupant’s area to safeguard their tenancy rights, if any, for induction once the building undergoes reconstruction. This decision underscores the balance between ensuring public safety and respecting the rights of the occupants in this legal dispute.

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The registration of properties in Delhi ground to a halt on Monday following a directive from the Real Estate Regulatory Authority (RERA), instructing all sub-registrars not to register new properties exceeding the maximum allowable number of dwelling units for a specific plot size under the Unified Building Bye Laws for Delhi, 2016 (UBBL).

RERA further instructed civic bodies to refrain from approving building plans that surpassed the permissible number of dwelling units according to UBBL and the plot size.

According to the RERA order, all building plans sanctioned by civic bodies, including the Municipal Corporation of Delhi, New Delhi Municipal Council, Delhi Cantonment, and Delhi Development Authority, after September 15, must explicitly state the total number of dwelling units and the distribution on each floor.

In addition, the order mandated that the ‘agreement of sale’ and ‘sale deed’ for dwelling units sold by promoters, builders, or collaborators must clearly specify the number of dwelling units approved by the respective civic body. Violations could lead to disciplinary action against the responsible officer.

Sub-registrars suspended the registration of new properties on Monday pending guidelines from the office of the divisional commissioner. A meeting of sub-registrars was convened to discuss the issue, with a registry official stating that registration would resume only after receiving clarity on the modalities from the divisional commissioner, following a potential meeting with the RERA chief.

The impact of the RERA order is expected to extend beyond DDA colonies, cooperative housing societies, and single units on freehold properties, affecting constructions in unauthorized colonies where multiple floors and units are commonly built on smaller plots. Builder floors and buildings in planned localities are also anticipated to be affected.

Under UBBL and in line with a 2008 Supreme Court order, plots ranging up to 50 sq meters with 90% maximum ground coverage and a FAR of 350 are allowed three dwelling units. The permissible number increases with plot size, reaching a maximum of 10 units for plots measuring 1,500-2,250 sq meters and above with 50% ground coverage and a FAR of 200.

While the RERA orders were issued on September 11, sub-registrars received them only on November 17. Copies of the order were prominently displayed in sub-registrar offices to inform the public about the new rule.

Criticism arose, with Delhi BJP president Virendra Sachdeva alleging bias in the RERA notification favoring plots above 250 sq meters. In response, an AAP government source pointed out that RERA falls under the central government’s purview, urging the Delhi BJP to seek answers from their party rather than the Delhi government.

The capital, home to 29 sub-registrars, witnessed 1.1 lakh sale deeds registered in 2021, a number that increased to 1.26 lakh in 2022.

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The court, during the hearing, noted that the demands from the slum dwellers for free accommodation, valuable assets, and large amounts as transit rent due to encroachments on public and private lands were excessive.

MUMBAI: In a recent development, the Bombay High Court has declined to provide interim relief in a petition filed by slum dwellers seeking a lump sum disbursal of over Rs 15 crore in transit rent arrears or the cancellation of a developer’s appointment in a significant Slum Rehabilitation Authority (SRA) project at Jerbai Wadia Road, Parel. The court, comprising Justices Gautam Patel and Kamal Khata, emphasized that there are limits to the rights claimed by the slum societies.

The petition was presented by Vaibhavi SRA Cooperative Housing Society Ltd against a March 2023 status quo order issued by the apex grievance redressal committee (AGRC). The High Court, while acknowledging the significant inequity in the city, stayed the proceedings before AGRC. Justice Patel remarked, “We do not believe that these (slum) societies have this spectrum of rights.”

The court, during the hearing, noted that the demands from the slum dwellers for free accommodation, valuable assets, and large amounts as transit rent due to encroachments on public and private lands were excessive. Justice Patel emphasized that salaried employees, including government and court workers, do not receive such privileges and often draw from their own sources to meet financial obligations.

Senior counsel Milind Sathe, representing the slum society with 286 members, argued that the project, dating back to 2006, saw the slum site fully cleared in September 2018. He highlighted that no transit rent had been paid from September 2021, and part dues from earlier remained unpaid. The court was informed that the project occupies an almost two-acre plot.

In January, the SRA chief had canceled the builder Landmark Developers’ appointment, a decision stayed by the AGRC on appeal. The slum dwellers moved the High Court, seeking the builder’s removal under Development Control Regulation (DCR) 33(10) and Section 13 (2) of the Maharashtra Slum Act. The court acknowledged the public law element and the question of statutory interpretation involved in such demands.

Representatives for Landmark Developers stated that the project required revised plans under the new DCPR and assured that transit rent arrears would be paid in installments. The High Court directed the builder to submit a reply, admitted the slum society’s petition, and scheduled further proceedings for January 29, 2024.

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The enforcement office has announced a helpline number for filing complaints. So far, 10 challans totaling Rs 2.5 lakh have been issued in various licensed colonies.

Gurugram: The enforcement wing of the town and country planning department (DTCP) has decided to impose penalties on developers who breach GRAP norms. The department has introduced helpline numbers for residents to report violations.

The enforcement office has issued a helpline number for filing complaints. Residents can report any construction activity in licensed colonies or violations of rules at the site by calling 9667143648. After receiving a complaint, the department will conduct an inspection and take necessary action. So far, 10 challans totaling Rs 2.5 lakh have been issued in various licensed colonies.

DTCP has also sent letters to developers in licensed colonies, urging compliance with GRAP norms and warning of potential actions if violations are identified during field inspections.

District town planner (enforcement) Manish Yadav has penalized 10 developers within a week for failing to halt construction and demolition activities immediately, not covering construction materials and buildings with green cloth, and not sprinkling water on the sites.

Yadav emphasized that penalties will be collected before issuing occupation certificates. The challan issued for rule violations on the site will be forwarded to DTP planning, requesting fine recovery before granting the occupation certificate to the building.

In a letter to builders, Deputy Commissioner of DTP planning Rajesh Kaushik instructed all builders to cease construction and demolition activities immediately and adhere to GRAP norms.

DTP Planning has deployed three teams to monitor construction sites in licensed colonies. Field staff, including junior engineers and planning assistants, are mandated to inspect sites regularly and submit reports to DTP Planning. Assistant town planners will also conduct surveillance alongside field staff, with clear directives on taking action against any rule violations, issuing challans per NGT orders, and pursuing legal actions as per regulations.

Challans amounting to approximately Rs 2.5 lakh have been issued for violations in under-construction buildings in DLF Phase 1, 2, 3, Sushant Lok 2, 3. Property owners violating National Green Tribunal rules face fines ranging from Rs 25,000 to Rs 50,000. Show cause notices have been issued, and responses are being sought regarding potential actions for violating environmental rules.

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