There are ample complaints by home buyers about developers’ not providing them promised facilities and services, whereas builders have a different story to tell Prachi Vyas (33), a home-maker residing in RNA Regency Park in Kandivili West (a western suburb of Mumbai) has more complaints than one against her developer. RNA did not handover the clubhouse meant for the residents’ society even after the completion of the project although the developer had promised to do so. RNA has been running the clubhouse with a private operator for the past ten years. And the story does not end there. Vyas alleged that the clubhouse was not being run properly by the developer and there was a due of over Rs 11 lakh as RNA didn’t pay the property tax for all these years. The private operator did not pay the maintenance charges to the society either. It’s only recently and that too after the society agreed to pay the property tax of over Rs 11 lakh that the developer agreed to handover the clubhouse to the society. The society is looking at recovering the balance maintenance charges from the operator.
The developer has his side of the story as well. "We did not handover the club house as the society never asked for it. Now, we are handing it over to the society and there is a mutual understanding that the society will pay the property tax of over Rs 11 lakh that has been due. All these years RNA has been charging around 75 paise per sq ft which is very low and the company brought the private operator for running the club as they had the expertise to run the clubhouse and gym,” a senior official of RNA said.
This is not just a one-off affair and such complaints by home buyers about developers’ unfulfilled promises are not peculiar to Mumbai alone.
In Bangalore, Rajiv Menon, who didn’t want to mention the builder’s name from whom he bought an apartment, said, “First, they said they would hand over the property in six months. It took two years. I had to shell out money for EMI pay-outs and also pay the rent for the house I was living in. Secondly, in terms of amenities, they promised children’s play area, garden and gym. Nothing was there within the finished project. When I asked, they came up with this funny logic, ‘We have given power backup instead of those’. And when I wanted to know the reasons for the delay, they told me that getting labour to work was a great problem.”
The situation is no better in other parts of the country either. In Kolkata, take the case of Kolkata West International City (KWIC), the first FDI project in housing sector in the East, pegged at Rs. 2,500 crore in 2005. The project being developed by Universal Success Group of Singapore-based NRI investor Prasun Mukherjee, had promised to become the new definition of global lifestyle, revolutionising the concept of modern living near the heart of the city.
It had promised to build over 1,000 bungalows, three IT Parks, a 13-acre club, a 200-bed hospital, two international schools, shopping mall and entertainment zones. The first 450 residential units were to be handed over in December, 2007, another 608 in next six months. Forget about how the developer has failed to handover keys to as many as 80 per cent of its allottees, it has faltered on other promises as well.
“Only a handful of (may be five-six) retired families have started living there without any promised amenities. They are also having a nightmarish experience living within the premises. For every little household thing they have to walk miles and come out of the compound. These are like few houses on a large barren land,” said Dipanjan Das, a senior level executive working with a Bangalore based large company, who is also an executive committee member of KWIC Buyers Welfare Association. Things have come to such a passé that the allottees have recently filed a petition before the Competition Commission of India (CCI) under Section 4 read with Section 27 of the Competition Act, 2002.
The promoter group attributed this inordinate delay to economic recession, delay in paper work related to land lease and delay in getting environmental clearance from the previous state government. They claim they have already handed over 101 keys and another 508 keys by April, next year. But they do not have a clear-cut answer as to when they would actually come up with other facilities promised like the school, market, hospital etc.
And it’s not just private sector developer, but public sector builder is no better. Even the largest public sector construction company-National Building Construction Company (NBCC) has failed to deliver residential units at Vibgyor Tower at Rajarhat on time. “We had booked a 1,336 sq ft apartment at this 845 units complex with our hard-earned money in 2006. They promised it would be handed over to us within 33 months. Forget about other amenities that they had promised within the complex, almost six years have passed and we are yet to get our keys. Those who have taken possession have done that accepting some curtailment on the promised amenities,” Bijoy Kumar Bhakat, a senior official of the government-run Steel Authority of India (SAIL) and a hapless allottee, told FC Build.
Although it is a crime now to sell space based on carpet area and no developer can legally quote per sq ft rate based on carpet area, and then deliver the flat based on super built-up, such a practice has not stopped completely. Not at least if you go by the experiences of some of the recent home buyers in Kolkata. “The builders first add 20-25 per cent on the carpet area to get to built-up area and then another 20-25 per cent over the built-up to arrive at the so-called super built-up area. If I am paying for a 1,900 sq. ft apartment, I am actually getting not more than 1,100 sq ft,” said Tushar K Chatterjee, a senior vice-president working with a leading Kolkata-headquartered company, who has recently bought an apartment after lot of shopping. “There is no technical definition of super built-up area. What to do, if someone wants to take undue advantage of that?" asks Amit Ukil of leading architect firm, Amit Ukil & Associates. Well, such cases occur when you buy apartments from unorganised sector or local developers. Whether such incidences can only be expected in a largely disorganised suburban market can well be debated. Santhosh Kumar, CEO — operations, Jones Lang LaSalle India, on his parts, felt, “Most developers operating in city centres are well-established and experienced players with reputations to protect. The incidence of gross defaulting on promises there is less than 10 per cent. It can, however, be as high as 15-20 per cent in emerging suburban areas because there is a fairly large incidence of small developers. Many developers who respond to sudden property booms in suburban areas are simply traders who are putting up the only project they ever will in their entire lifetimes. They have no experience or technical knowledge and often do not have banks backing them. Most emerging suburbs are also defined by unclear land titles.”
Sumit Ghosh, vice-president BOP (Better Option Propmart), a leading property consultant, subscribed to the same view. “Most locally grown developers which are not in the top bracket have various other business interests which are concurrently running along with their real estate projects. These companies commonly divert funds collected from customers as booking amount to their other businesses or projects. Also, in lot many cases the customer pays up even before a piece of land is allocated to the developer. Apart from the unholy nexus between developers and land authorities, customers are also responsible as their ignorance about processes, procedures and land laws is fully exploited by unscrupulous developers,” said Ghosh.
What is the recourse then, that the hapless homebuyers can take? True, there is an urgent need for a regulatory body that will monitor these things. There is also the need for a precise development manuals which have to be adhered to by the developers and they should be made to sign an agreement with the government before any land allocation and clearances are issued.
“The customers can always go to a consumer court. Also, we see a very important role of the big consultants in creating adequate pressure on the developer to deliver what is promised. Furthermore, as and when a regulatory body is put in place by the government, it should be empowered adequately to penalise any violation of the developers manual even to the extent of cancelling licence. Nowadays, the educated class is actively creating customers lobbying groups via online platforms so as to empower themselves to pressure defaulting developers.
