‘Scams one after another’
The buoyant rise in the real estate market in 15 -20 years is an outcome of our greed and black money and has got nothing to do with the housing problem. We have more investors than homebuyers today. Some of the standard industry practices have made us believe that there is complete lawless- ness with regard to regulation of real estate. There are scams one after another.
The first is the land acquisition scam. This is the stage where builders strengthen their patronage of politicians (mostly with the chief ministers of states). Notification leads to threat of acquisition. Threat leads to developers moving in with cash deals and offering more than the government compensation. After the developer has acquired all the land, notification is taken back. Then comes the super area scam. At the time of launch developers sell an area which is far in excess of what is sanctioned by the authorities.
Developers have devised a standard one-sided buyer’s agreement that contemplates that they can sell common areas like parking area, community center, schools, shops, EWS and service personnel apartments and also retain rights over the entire open land and maintenance of the complex. They bribe to increase the FAR and continue to build more in the open land of complexes for decades.
The terms and conditions concerning grant of licenses has remained just an academic exercise. Developers should make only 15% profit, maintain a separate account of each project in a scheduled bank and deposit 30% of the amount received from each apartment owner within 10 days. They should construct schools, community buildings at its cost and pay for the maintenance of the common areas and facilities until it is handed over to the owners’ association. Developers follow none of these and expect every possible support from the authorities to help them make more money.
As per the law only the dwelling unit (carpet area + walls) can be registered but builders are getting super area registered that allows investors/speculators to make huge profits out of thin air. Builders register a society with their own employees as the society of owners of the complex and illegally file a declaration without consent of apartment owners.