All about the price of project delays and project deviations
A vigilant approach will go a long way in protecting buyers from financial losses and fraudulent practices by developers
Reams of newsprint have been dedicated to discussing the sufferings of consumers in the Indian real estate sector. Who has not heard about homebuyers’ woes related to late delivery of projects, deviation of housing projects from promised quality, additional payments due to change in apartment area and inadequate protection of their rights?
The question that invariably arises is whether the developer is at fault, or whether larger market forces beyond the control of developers are at play.
Construction delays: Is the developer or approval authority responsible for this? Technically speaking, the time spent in obtaining all requisite approvals adds to the total time of completing a project.These approvals can be needed at any stage between the launch of the project and the actual handover of apartments to buyers. Delays experienced for approvals automatically impact the specified delivery time.
A developer has to obtain several approvals from the state and central agencies and ministries before launching a project. In every business, there are two main factors that cause the overall price of finished products to push up- high holding costs (determined by the time period of holding raw material) and interest costs (when funds have been borrowed).
In the real estate sector, land is the basic raw material. The longer a developer has to hold his land; without getting any receipts through the sale of proposed apartments, the higher is his project cost.
In the current scenario, obtaining the 57-odd permissions to begin construction of a project can extend to two The difference in the promised quality and actual delivery status of the apartment continues to be a prime concern for real estate buyers. A change in the apartment area after buying from the developer can occur i f a change in project plan is necessitated due to a design or approval issue. A deviation of up to 10% is usually acceptable. However, for a higher deviation, a customer must definitely seek legal recourse. Project deviations can happen because of structural deficiencies of the overall system. However, at times developers also tamper with the overall project quality or make arbitrary changes in their project designs with a clear intent to maximise profit.