Homebuyers to bear the brunt
will this decision impact the financials of the company and then take a final call. The loss that will arise after paying the compensation is approximately
160 per sq ft, which is a massive amount at a macro level.”
“A s i milar s i t uation i n Greater Noida (West) had led to a fall in demand and rise in prices. It is obvious that if the land acquisition cost goes up, it will add to the total cost of one unit which will have to be borne by the customers in near future. With this decision being implemented now, the cost of units in Yamuna Expressway will definitely increase and will affect the demand. Unit costs may go up by at least 10% along the Yamuna Expressway.”
Other developers say that they will absorb the additional burden to some extent, but they will have to increase the prices of unsold inventories marginally to cope with the hike in land prices.
“I n t he i nterest of our existing buyers we will not be increasing the cost and absorb the additional burden, but for the new bookings we are left with no option but to increase the prices slightly,” says Vikash Bhagat, director, Airwil Group.
YEIDA has fixed additional recovery costs from developers and industrial and institutional plot owners but it has not fixed what money individual allottees of group housing projects will have to pay to builders. There is a possibility that builders may demand unjustified amounts from homebuyers.
Asked if YEIDA should fix an amount for homebuyers, Bhagat says “It will be in the interest of all if the YEIDA fixes this amount. At least the buyers will have clarity on why prices are being increased and that the developers are not behind this. Buyers are more aware now and they keep an eye on all the developments.”
Many developers suggest t hat t he authorities must think of some more options as this will lead to an overall negative impact on the market. “The current rates are hovering around ₹ 2500-3000 per sq ft. Even after the hike, the region will be the most affordable in the NCR, hence there won’t be any major impact on demand. The festival season may provide the required fillip to the realty market and balance the effect of the hike in prices,” says Pawan Jasuja, director, Finlace Consulting Pvt Ltd, a private consulting firm.
YEIDA’s demand for ₹ 1,330 per sq m will put a 300 sq m plot owner back by an additional amount of ₹ 3.99 lakh increasing the cost of the plot from ₹ 15 lakh to ₹ 19 lakh. However, the present market rate of the plot is around ₹ 32 lakh.
Besides these 21,000 plots owners, there are hundreds of homebuyers who have bought apartments in various group housing projects. They, too, are upset with the developers’ fresh demand for additional money following YEIDA’s decision to ask developers to share the extra financial burden at the rate of ₹ 1,770 per sq m.
“YEIDA has fixed the amount that it has to raise from the developers but it has not decided how the developers will pass this burden on to homebuyers. There are ample instances of how developers are arm-twisting homebuyers and asking for unjustified sums in Greater Noida and Noida Extension under the pretext of enhanced compensation,” says a homebuyer who has invested in one of the group housing projects along the Yamuna Expressway.
To t his, PC Gupta, CEO, YEIDA’s reaction is, “If the plot owners feel that our demand for ₹ 1,330 per sq m is unjustified, the Authority is ready to return all their installments and interest that they have paid till date with a 6% additional interest.”
“Due to enhanced compensation, the Authority will have to raise an additional amount of ₹ 5,245 crore and we have decided to raise this money from 21,000 plot allottees, dev,elopers, industrialists and institutional plot owners of various sectors along the Yamuna Expressway. In 200910, the external development cost that we levied on plot owners and other allottees is meagre compared to the escalating cost of construction material and labour charges.”
“We couldn’t carry out any development work in the area due to protests by farmers and court cases in the last five years. Our external development cost (EDC) will go up many fold now. The Authority is already under financial burden of ₹ 3,000 crore. This is the best possible solution for the peaceful and fast development of this area and it’s a win-win for all the stakeholders,” adds Gupta.
Buyers in Noida Extension have also been asked to pay an additional “acquisition charge” by the Greater Noida Authority which they say is an “unfair demand.”
Thousands of homebuyers have decided to move court against the alleged misuse of dominant position by the builders.
“The Allahabad High Court had enhanced farmers’ compensation by 64.7% in 2011 and when the Greater Noida Development Authority raised the enhanced compensation amount from the developers, the latter had, promised not to pass on any financial burden on us. In lieu of that, they asked us to avail additional FAR (floor area ratio) from 2.75 to 3.5 which meant that they would construct more flats in the same area so that they could recover the additional money. Unfortunately, we had faith in them and didn’t take any written promise. Now most of the developers seem to have backed out from their promise,” says Indrish Gupta, founding president of Noida Extension Flat Owners’ Association.
According to Gupta, recently a reputed developer has asked its allottees to pay ₹ 50 per sq ft additional cost at the time of possession. The developer’s logic is that it has paid money to the Authority for enhanced compensation to the farmers.
“We h a v e d e c i d e d to move Allahabad High Court against this unfair practice,” says Gupta. Besides Noida Extension, many developers have raised similar unjustified demands in Greater Noida on the pretext of having to pay the Authority extra money for enhanced compensation to the farmers.
“I paid ₹ 6 lakh to the devel- oper because he threatened to cancel my allotment. When I requested him to give me the details as to how he has arrived at a particular figure, he refused to share any information. When I complained to the Authority, it refused to intervene, saying that it was not a party to the agreement signed between the builder and the buyer at the time of booking,” says Ekta Sharma, a homebuyer.
Many homebuyers say that as construction progresses and the project nears completion, the prices of the flats go up and buyers stand to gain a premium. But the developers become greedy and start demanding more money on the pretext of one thing or the other.
“In many areas where the issue of enhanced compensation does not arise, developers have resorted to other tactics. For instance, at the time of possession they may claim that the super area of the flat has gone up by 10% and homebuyers are then forced to pay 10% more of the total cost of the apartment. Super area is also such a vague concept that even a realty expert fails to measure it correctly,” adds Sharma.