Light at the end tunnel for home buyers
NK SINGH
The project promised to “change the identity”
of Bhopal. With 22 floors, Gammon India’s Central Business District in the
State capital is the tallest ever high rise of MP. Coming up in downtown
Bhopal, the residential-cum-commercial complex is carved out of what once used
to be public land. Part of MP Government’s re-densification plan, it was
envisaged long before smart city idea came up. Its developers guaranteed
“unlimited luxury” and advertised it was not for everyone: “The crème de la
crème will be invited to possess it.” Among the people who booked flats are the
great and good of the town --- civil servants, doctors, engineers, businessmen.
Now 10 years in the making, the project
is a towering example of all that is wrong with real estate business in the
State. Government allotted land to Gammon in February 2008, a boom period for
realty. Under lease conditions, it should have completed by 2013. But slow
progress made the government extend the deadline till 2015. An official
committee imposed fine on developers for delay, with penalty reaching the
startling figure of Rs two crore. But CBD seems nowhere near completion. Now a
high powered ministerial committee, headed by Finance Minister Jayant Malaiya,
has been formed to look into lease violations and penalty.
Home buyers are left in a lurch. Developers
say it will deliver first block of apartments only by 2019, an overrun of four
years. Most buyers have paid full amount for their property, incurring hefty
EMIs and interest on borrowed funds. Labourers struck work for non payment of wages.
Media reports say some suppliers, too, suffer irregular payments. Only the
company can tell where the investors’ money was spent.
It is exactly due to open and shut cases such as Gammon that Real
Estate Regulatory Authority (RERA) was brought into existence - “to deal with
complaints against builders and real estate agents”. RERA promises light at end
of the tunnel for thousands of home buyers.
“Buyers have paid exorbitant amounts to book properties in
Shrishti CBD (Gammon). We have demanded a Forensic Audit of Deepmala
Infrastructure Pvt Ltd., the developer, to learn where our investment went.” says Chandana Arora, who has taken
Gammon to RERA, seeking justice. Forensic audit is conducted to examine and evaluate
a firm's financial information for use as evidence in court, and possible prosecution
for fraud, embezzlement or other financial misconduct.
Gammon could
be the most high profile case, but not the only one. Hundreds of projects are delayed
in stressed realty sector. “Almost 90 per cent of complaints we have received,”
reveals MP RERA Chairman Anthony de Sa, “are about delay in projects.”
When the
sector was booming, everyone who dealt in real estate, with money from buyers
and banks, siphoned off parts to invest elsewhere, thus artificially jacking up
property prices to astronomical levels. This led to delayed construction, causing misery to investors with funds borrowed on
interest. Diversion of funds by
builders is the crux of the problem. “There have been some complaints,” admits
Wasiq Husain, President, Bhopal CREDAI. RERA Act deals with such unfair
practice by insisting upon earmarking 70 per cent of funds for construction,
deposited into the specific project’s account.
RERA also
provides safeguards like a fair agreement between builder-buyers, sale by
carpet area, time-bound delivery, payment of interest by builder in case of
delay, and regulating interest chargeable from buyers. Its strict provisions
ensure that promoters can’t advertise projects till duly registered with the
Authority. “They have powers to penalise, they have powers to prosecute,” says
Manoj Shrivastava, Principal Secretary of Commercial Tax Department.
Most
stakeholders agree that if implemented honestly, RERA will benefit all
concerned. Says architect Manoj Misra, “It will weed out fly-by-night
operators.” However, the builders have one major complaint --- fee for RERA
registration is extremely high. “If I come up with a 100 acre project, I may have
to shell out Rs one crore” says Husain. Some are concerned about the timing.
Architect Ajay Kataria points out that RERA “came at a time when realty was already
reeling under surplus inventory”.
MP was first
State in country to form RERA. Realty experts confide that MP and Maharashtra
are the two States that have adhered to the spirit of the original Act while
framing rules for implementation. It’s a totally different story in UP, Gujarat
and Karnataka, where the Act’s provisions have been diluted to make it almost
toothless. MP RERA has raised the bar and even registration is not so easy.
Among the 1606 applications received by RERA for registrations, less than
one-fourth could muster scrutiny in the first round.
Everyone
agrees that MP RERA is equipped with enough teeth. The question is, whether it
will bite, bringing the much needed relief to consumers? And when? Let’s wait
and watch.
My column Powers That Be in DB Post of 18 Sept 2017
nksexpress@gmail.com; Tweets @nksexpress
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