No clarity on land pooling policy: have buyers been duped of 1000 crore?
With the urban development finalising realty regulatory rules for Delhi, societies registered under land pooling might face problems L N K- I K- II P- I P- II DELHI J
Samarth Daksh, 70 years, was lured by a housing society to invest in three residential properties two years ago in Delhi’s L Zone – which is part of the Delhi government’s land pooling policy (LPP). He made cash down payments for three apartments in three multi-state cooperative societies, which cost ₹ 12 lakh, ₹ 7.5 lakh and ₹ 5 lakh. As proof of the investments, he was just given a kacha (temporary) bill by the society. Interestingly enough, cooperative housing societies have not been registered or allotted land by the Delhi government after 1992.
Daksh i s a worried man today as the ministry of urban development has finalised the National Capital Territory of Delhi Real Estate (Regulation and Development) ( General) Rules, 2016, or RERA for the setting up of a real estate regulator. Once the rules are implemented, developers have to furnish authenticated copies of the title deed of a property reflecting the title of the promoter to the land on which the project is to be developed and show original sanctioned plans and layout plans. They also have to make disclosures of the total amount of money collected from allottees.
Also, developers who have aggregated land as part of the Delhi government’s LPP have to return a minimum 60% of the land to the Delhi Development Authority (DDA) which will give them a plot for development – not necessarily in the same location as the original plot they acquired. Hundreds of welfare societies have been registered after 2007 when the Delhi Master Plan (MPD 2021) was notified, laying down LPP norms and earmarking five zones in the Capital – J, K (I and II), L, N and P (I and II) for it. About 27,000 hectares are to be developed under LPP out of which 5, 300 hectares are in zone L.
What this means is that no developer can claim to own a specific parcel of land at this stage, especially when DDA is still awaiting the Delhi government’s decision to declare 95 villages as development areas, 89 of them as urban villages. The state government is yet to operationalise the land pooling mechanism and in the absence of such a direction, there is no way in which developers or housing societies can register their projects with the regulator. A Delhi government spokesperson says that it will take time to operationalise the policy.
Daksh fears that the money he has paid for the three apartments ( real estate experts estimate such deals to have cost gullible investors anything around ₹ 1,000 crore) will never be returned.Also, RERA lays down guidelines on how a model agreement should be entered into with homebuyers. How will that be done, when there are mostly kacha receipts that buyers have and no proper agreements?
The question here is how will these societies qualify as a ‘developer’ under RERA rules when the LPP has not yet been operationalised? “Societies, in their capacity as promoters, will need to register under the RERA. Since non-registration (after the setup of the regulator) is a punishable offence, societies have to continue to have to abide by this requirement. This is likely to create a transitional problem,” says Yogesh Singh, partner with a legal firm, Trilegal.
Therefore, anyone promoting projects under LPP is committing a financial fraud. “What empowers them to collect money and sell flats under the name of a society? Under the LPP, mere availability of land with a farmer does not make him a developer,” says Ramesh Menon of Certes Realty. “Many land parcels shown to the consumers may or may not be in the same parcel under the LPP and can be reallotted within a 5 km radius. A license to build requires specified land parcel of converted residential land but currently all land is for agriculture. Under the LPP, if the societies ordevelopers have over 20 hectare, they get 60% land back. If they have less than 20 hectares, they get 48% back. The minimum land required is five acre. A company, say it’s called ABC Private Ltd, is only staking claim to a parcel but it actually has no land. It has only given membership of a society which may be developed in the future but the cost of land has already been recovered from the buyers,” he says.
Experts estimate that the total amount collected fraudulently so far from homebuyers, going by the ₹ 8 lakh to ₹ 15 lakh paid per apartment, could be ₹ 1,000 crore.
“This money has so far been collected in the name of proposed development,” they say, adding will this be returned to these buyers and a new model agreement signed between the two entities. Post RERA, the developer entity first needs to qualify as a developer and get a license to qualify as a builder.
Architectural plans of the project have to be approved before it gets a license to build.
Experts estimate that the total amount collected fraudulently so far from homebuyers under land pooling is as much as 1,000 crore.