Freebies are not impressive
People expect timely delivery, quality construction and a balanced builder-buyer agreement
Dussehra is here and taking advantage of the festive fervor, many builders have lined up freebies such as LCD TV sets, Jewellery, cars, home appliances etc to go with the sale of their apartments, hoping to lure people to invest. In the last couple of years, however, this marketing gimmick has apparently failed to impress people.
Today, almost every real estate consumer - be it an end-user or an investor - is of the view that the Indian real estate companies have failed to live up to their expectations. Buyers believe that an LCD or television can’t motivate them to put in their hard-earned money into a project that’s not good enough.
They expect timely delivery, quality construction, consumer-friendly approach, clear title of the land and a balanced builder-buyer agreement so that they don’t feel victimised at the end of the day.
“Today, the most common complaint against any developer is the delay in delivery of possession of flats. Many top real estate companies of the country have failed to live up to their commitments. A few who have delivered on time have compromised on quality,” says Nitin Saxena, a consumer activist.
Vivek Singh, a senior consultant in a reputable Indian company who invests in real estate projects frequently, says that when a developer launches a project, he usually promises that possession will be handed over in 36 months. “He takes the booking amount, which usually ranges from R1 lakh to R15 lakh, depending on the cost of the flat and then sits over it for almost six months. His commitment to deliver you a dream home in 36 months starts from the day you sign a builder-buyer agreement with him,” says Singh.
The developer takes 90% of the money within one-and-ahalf to two years of singing the said agreement. It’s the most painful period for most buyers as they end up paying for both EMIs as well as rent as their apartments are not complete. The developer usually never keeps his promise to deliver in three years and sometimes even for five or six years.”
Amrit Kapoor, a Delhibased businessman who bought an apartment worth R60 lakh in a prestigious project along the Noida Expressway in 2007, says the developer promised to deliver the flat to him in 36 months but there’s been no sign of an apartment in five years.
“Buyers have no issues if a developer says that he will deliver the flat in five or six years and then take payments accordingly. But why do you commit to something you cannot deliver,” says Kapoor.
Lopsided builder-buyer agreements are one of the biggest problems in the real estate industry. If a consumer delays EMIs he has to pay a fine at 18% rate of interest but if the developer delays in giving possession, he just gets away by paying a penalty.
Ritu Shah, a Delhi-based fashion designer who has invested in a well-known township in Noida, says that her builder-buyer agreement has a penalty clause saying that the developer will have to pay penalty at the rate of R5 per square feet every month in case delivery is delayed. “I have already paid R24 lakh for an 850 sq ft flat, the total cost of which is R30 lakh. The developer is supposed to hand over possession by the end of December 2012 but there is no sign of the flat getting completed on time. Considering the builder’s earlier track record, I may not get possession for another two to three years. So after December, the developer will pay me R4020 every month for the delay while my EMI is R19,000,” says Shah.
In many cases even the handover of flats doesn’t mean the end of problem. A whole lot of problems confront you once you move in. Satish Kumar, a businessman who lives in a multi-storeyed apartment in Ghaziabad, says “many developers don’t take completion certificates from the concerned authorities and buyers have to face huge problems later.”
As per the building bylaws, it’s mandatory for every developer to get a no-objection certificate from various departments such as fire officer and municipal bodies etc.
“The legal position is that a developer can’t offer possession until he gets a completion certificate for the project. Unfortunately, there have been hundreds of group housing apartments in Delhi, Ghaziabad, Noida and Gurgaon where possession has been given and people have moved in, but the completion certificate for the buildings have not been received,” says Saxena. Apartment owners in many cases cannot register the properties in their name until a completion certificate has been received.
“How can we sell the flat? Even if someone wants to do it through general power of attorney, he/she will have to sell much below the ongoing market price because the flat will be treated as unauthorised or disputed,” says Pradeep Kumar, a Delhi High Court lawyer.
It’s necessary that buyers ask for completion certificated because this guarantees the safety of the buildings they have their apartments in. Cases of elevators crashing and complaints of defective fire-fighting equipment mean safety measures have not been put in place.
When asked what residents would like their builders to give them during this festive season, Sachin Gupta, resident of a premium residential location on the Golf Course Road Extension in Gurgaon, says the residents have many unresolved issues bothering them and they want those sorted out.