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Thursday, October 6, 2022

Owing a home is a distant dream?


AMIR HOSSAIN | Issue Dated: November 30, -0001, New Delhi
Tags : National Capital Region | NCR | DLF | Real Estate | Unitech | jaypee group | raheja developers |

If you are planning to book a house today in India, especially in the National Capital Region (NCR), and are hoping to get possession within 30 months (or three years, including a six-month grace period), then you need to be alert about the fact of delayed projects. Surprisingly, buyers have started to consider a delay of 6-12 months as granted in India. Santhosh Kumar CEO, Operations, Jones Lang LaSalle, a global real estate consulting and property management firm recently said that “the track record for timely completion of projects in metros has been poor in Mumbai, Chennai and Delhi-NCR.” He further added that “the National Capital Region’s performance in terms of delivery of residential supply due in 2013 has been the worst across all the major Indian cities.” A real estate research firm called PropEquity revealed in their report that only 23 per cent homes have been delivered on time by the real estate developers in and around New Delhi as of last July.

The irony is that the list of delayed projects comes from India’s biggest and most trusted real estate companies like DLF, Unitech, Raheja Developers and Jaypee Group. The management of these companies has claimed that the global economic downturn is the main culprit in their failure to deliver homes on time. DLF’s Group Director, Rajeev Talwar explained the matter in a broader way to media. He said that ‘‘DLF has faced problems after the 2008 global economic crisis. There has been a general downturn in construction and financing. The number of clearances required further complicate matters. The cost of inputs like steel and cement has risen substantially. And the government’s rural employment guarantee scheme has led to a shortage in labor.’’ There are several projects that have been delayed in the NCR, one being due to the Noida Extension land acquisition debacle, and due to further stringent and multi window clearance policies. However, in this way, builders cannot escape from the problem. There are some counter views also. Ashutosh Limaye, an analyst at Jones Lang LaSalle has voiced his concern in media that “over the last few years, developers have launched too many projects without completing existing ones. Handling several projects with limited cash flows leads to problems at the execution end.’’ There is another reason of delay or abandonment of many projects. Analysts highlight that whenever a real estate company witnessed low sales for a specific project, they would like to start a new project to raise funds to complete the older one. Thus the cycle goes on and the number of delayed projects increases over the period. 

All the way, buyers are the victims and need to suffer huge losses. Although there are certain laws to guide the refund process, that does not protect the interests of buyers completely. M.L. Lahoty, a lawyer at the Supreme Court of India stated recently in the media that “if the builder doesn’t deliver on time, the buyer can’t hold him accountable. But if the home buyers delay payment, even by a day, they have to pay the developer an 18 percent punitive interest.”

At last the Real Estate (Regulation and Development) Bill, 2013 was approved by the Union Cabinet on June 4 of this year and has been referred to the Parliamentary Standing Committee on Urban Development for review and suggestions. The legislation may be a milestone to protect home buyers from voracious practices by real estate builders if it get passed in the Parliament ignoring strong lobbying of real estate developers. Still, buyers need to be careful and should scrutinise projects themselves before booking a flat to avoid end time harassment.

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Issue Dated: Feb 5, 2017