NEW LAW TO PRO­TECT PROP­ERTY BUY­ERS

Er­rant de­vel­op­ers face up to 3 years’ jail and sub­stan­tial fines

New Straits Times - - Business -

GREATER NOIDA (In­dia)

IN 2010, Neena Nag­pal and her hus­band spent their life sav­ings on a flat out­side Delhi that was never built. Now, a new law seeks to pro­tect thou­sands of house buy­ers like her from un­scrupu­lous prop­erty de­vel­op­ers.

“The en­tire ex­pe­ri­ence has been painful,” says the 54-yearold, whose hus­band re­cently died, leav­ing her to take care of their par­tially deaf son alone in a two-room house in a run-down part of the In­dian cap­i­tal.

“When you don’t walk what you talk, it re­ally hurts us.”

From the mid-2000s on­ward, mil­lions of mid­dle-class In­di­ans ea­ger to own their own houses poured cash into new build­ing projects on the out­skirts of ma­jor cities as a prop­erty boom took hold across the coun­try.

Many were young work­ers in the bur­geon­ing in­for­ma­tion tech­nol­ogy sec­tor ea­ger to break away from the tra­di­tional joint fam­ily set-up.

But the in­dus­try was rid­dled with prob­lems and buy­ers were al­most al­ways the vic­tims.

“What was shown and what was de­liv­ered was al­ways dif­fer­ent,” said Gu­lam Zia, ex­ec­u­tive di­rec­tor at real es­tate con­sul­tancy Knight Frank In­dia.

“De­vel­op­ers got away with what­ever they wanted and con­sumers al­ways got a raw deal. Now a de­vel­oper can’t hide any­thing and he can’t go back to his old habit of tak­ing the con­sumer for a ride.”

De­vel­op­ers could face jail sen­tences of up to three years and sub­stan­tial fines un­der the new law, which took ef­fect on May 1 and ap­plies to on­go­ing as well as new projects.

State gov­ern­ments will be re­spon­si­ble for keep­ing tabs on de­vel­op­ers’ progress and en­sur­ing they stick to their plans for ev­ery­thing from the num­ber and size of apart­ments to the con­struc­tion sched­ule.

Buy­ers’ money will have to be de­posited in an es­crow-like ac­count and can only be used for the prop­erty they are in­vest­ing in — not to launch the de­vel­oper’s next project.

If the flats are not de­liv­ered on time, the de­vel­oper will have to pay the monthly in­ter­est on the buy­ers’ bank loans.

The Con­fed­er­a­tion of Real Es­tate De­vel­op­ers’ As­so­ci­a­tions of In­dia, a trade body, wel­comed the new law say­ing it had been call­ing for bet­ter reg­u­la­tion.

The road from Delhi to the satel­lite city of Noida pro­vides am­ple ev­i­dence of the prob­lems, lined as it is with half-built apart­ment build­ings, most be­hind sched­ule.

Among them is Lo­tus Panache, where Nag­pal and her fam­ily were hop­ing to make a home.

The 3C Com­pany sold the de­vel­op­ment as “an en­vi­able blend of sheer lux­ury and subur­ban life­style”, tout­ing am­bi­tious plans for a creche and 12,500 square me­tre sports and leisure cen­tre.

The re­al­ity — rows of un­fin­ished shells — is a far cry from that.

Al­though every buyer has paid at least 90 per cent of the price, only about 800 of the 4,200 promised apart­ments have been de­liv­ered and the project is nearly four years be­hind sched­ule.

About 600 buy­ers have filed a case against the de­vel­oper in a con­sumer court de­mand­ing the houses they paid for and fair com­pen­sa­tion for the de­lay.

But the slow pace of In­dia’s over­bur­dened ju­di­cial sys­tem means they are still wait­ing.

One cou­ple bor­rowed two mil­lion ru­pees (RM134,819) to buy an apart­ment on the 19th floor of a de­vel­op­ment be­ing built on the out­skirts of Delhi by Su­pertech.

It was not un­til they had paid 95 per cent of the pur­chase price that they dis­cov­ered the com­pany only had per­mis­sion to build 12 storeys.

They have taken the com­pany to court, but are still hav­ing to re­pay the loan at 20,000 ru­pees a month as the case con­tin­ues. AFP

AFP Pic

Pedes­tri­ans walk­ing past in­com­plete res­i­den­tial apart­ments in Greater Noida. Un­der new laws, if prop­er­ties are not de­liv­ered on time, the de­vel­op­ers will have to pay the monthly in­ter­est on the buy­ers’ bank loans.

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