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Realty developers are learning it the hard way but it is working out in the favour of home buyers. 
 After the Unitech case, when the management was jailed over multiple delays over delivery, <keyword id="6354553" type="COMPANY" weightage="20" keywordseo="real-estate">real estate</keyword> firms are telling the truth about the deadline to their customers. 
 
They are now not giving any imaginative figure and if a project will take six years of time, they will say six. 
 As per media reports, <keyword id="6362997" type="CITY" weightage="20" keywordseo="DLF">DLF</keyword> has increased the delivery time from 36 to 48 months. This way, even customers will not lose their faith in the builders. 
 
Property research firm reported that nearly one-third of more than 25 lakh apartments launched between 2008 and 2014 were delayed by at least a year. 
 
Home buyers have complained to the National Consumer Disputes Redressal Commission (NCDRC), state-level consumer commissions, the Competition Commission of India (CCI) and even filed first information reports with the police where fraud was involved. 
 
"Consumers don't expect houses being built in a year. They also know that there are a lot of other entities involved in building a project. They expect an update and constant communication along with transparency,” Parth Mehta, managing director of Paradigm Realty, told ET. 
 
A spokesman for builder BPTP in Gurgaon told ET timelines have been revised to 48-54 months in most of its new projects. 
 
(Image: Reuters)

Once bitten, twice shy! Realty developers learn from Unitech case, to be more realistic now

Home buyers are no more the victims; in fact, with their newfound legal powers, they are becoming more and more confident about challenging the mighty real estate developers. They are now seeing courts, demanding justice and filing cases for cheating, fraud and delays in delivery against builders. 
 
In the recent past, we came across one such case, when Unitech chairman, two MDs and a director spent a night in jail. Proactive orders from the National Consumer Disputes Redressal Commission (NCDRC) against different builders too have boosted the confidence of home buyers and motivated them to fight builders in different forums. 
 
However, for MDs and CEOs of real estate firms, this has come in the form of a wakeup call. They are now clear about delivering promises and dealing with customers with care. 
 
Hiroo Advani, who is a senior partner at law firm Advani &amp; Co, expects that with recent developments, more consumers would now come forward and file such complaints. 
 
"Home-buyers have realised that civil remedies are not good enough and criminal proceedings are turning out to be more effective. This seems to be the only way left to ensure that developers deliver on their promises. With this, developers would have to take up personal and not just professional responsibility hereon," he told ET. 
 
The popular cases against real estate companies and builders that we have seen in recent months include that of Noida-based builder Rahul Gaur (Brys group) who was arrested by Odisha police, and a Gurgaon court’s warrant against ERA-Adel Landmark after having found it involved in 21 fraud cases. 
 
In Gurgaon, once a booming property hub, the district administration has formed the Gurgaon Arbitration Council which would resolve pending real estate disputes in a fast track manner. 
 
<a href="http://cdn.patch.com/users/22842320/stock/T800x600/20150455258a5a13155.jpg">Image source</a>

Home buyers are now fighting fraud builders head-on

The great Indian urban <a href="http://www.businessinsider.in/Commercial-real-estate-rises/articleshow/51895047.cms">real estate</a> boom is screeching to a halt with the home-sales market gradually reaching a dead end day by day. With home buyers’ hard earned money at stake, the builders are often delaying the projects citing capital issue. The Indian courts have fortunately passed its verdict on interest of the <a href="http://www.businessinsider.in/Commercial-real-estate-rises/articleshow/51895047.cms">home buyers</a> and in many cases have asked the builders to refund the money with interest to the customers. While that’s a great victory for common people, the <keyword id="6354553" type="COMPANY" weightage="20" keywordseo="real-estate">real estate</keyword> giants aren’t really comfortable with the verdict as they can’t make ends meet to raise the money and return when many projects are under construction. 
 
The slowdown of home sales have made a few builders convince the courts that rather than refunding money they would better complete the pending projects. 
 
According to a news report in The Economic Times, the counsel for Parsvnath had told the <a href="http://www.businessinsider.in/Commercial-real-estate-rises/articleshow/51895047.cms">Supreme Court</a> that the order passed by NCDRC asking it to refund entire amount paid by 70 home buyers in its <a href="http://www.businessinsider.in/Commercial-real-estate-rises/articleshow/51895047.cms">Ghaziabad</a> project with 12% interest would "amount to a mad rush and everybody will come to get the money back." 
 
Parsvnath has agreed to complete the project instead and hand over apartments to buyers. While earlier the builders have turned a deaf ear to customers’ demands of completing work on time, the courts’ pressure has finally forced the goading builders to act instantly. 
 A spokesperson for <keyword id="6361138" type="CITY" weightage="20" keywordseo="Unitech">Unitech</keyword> told the ET that the challenges that the company has been facing include working capital, lack of some infrastructure in the areas as well as outstanding amount from customer. 
 
In a plan to expedite construction at various sites, Unitech has also started to work in tandem with Resident Welfare Associations (RWAs). It has been a collaborative effort with the support of the government as well. Government has assisted by the way of speedy clearances on pending issues. The RWAs have helped by persuading other home buyers to pay the outstanding dues," a spokesperson for Unitech told the financial daily. 
 
"We have also persuaded some of financial institutions to give us last mile funding to be able to expedite the progress," says the Unitech spokesperson in discussion with the ET. "In our case, in the pending projects to be delivered, the value of the receivables is in excess of balance construction cost to be incurred." 
 
How will Unitech get the money? The real estate giant has decided to raise around '300 crore from financial institutions as well as by selling land for initial working capital to complete over 40 housing projects in the next two years. The rest of the money will come from customer receivables. 
 
A spokeswoman for Parsvnath, on the other hand, told the ET, they realise that once construction activity restarts, the large outstanding yet to be received from home buyers will start flowing into the Exotica project in Ghaziabad. 
 
Parsvanath believes that the pending work in most under-construction towers in the project will be handed over for possession within a year and some more months. 
 
A spokesperson of Emaar MGF told the ET that the company's projects have now been fast tracked for completion and the schedules are being shared transparently with customers. "Post initiation of reorganisation process for demerger, all necessary financial and operational/management resources have been made available to complete the projects at the earliest," he said. 
 
Bankers and lenders say it isn't easy for builders to restart stalled projects as it requires re-mobilisation of funds as well as labour and materials. 
 
Where lies the solution? 
The easiest viable option for the builders is to loan money and invest in the under-construction projects and quickly get things in place. 
Rajnish Kumar, managing director, national banking at <a href="http://www.businessinsider.in/Commercial-real-estate-rises/articleshow/51895047.cms">State Bank of India</a> said to the ET that the existing project can also be sold to some other builder willing and able to complete the project. "But, this may mean some price escalation and the process may be complex. It will also require some sacrifices on the part of all the stakeholders.” 
 
Vaibhav Gaggar, partner at law firm <a href="http://www.businessinsider.in/Commercial-real-estate-rises/articleshow/51895047.cms">Gaggar &amp; Associates </a>told ET that in most cases courts take up on behalf of home buyers, (and) without exception, send a notice to the builder asking him to sit across the table and find an amicable solution so that homebuyers are not forced into litigation. "Most home buyers are willing to give money they owe to the builders if they see fair dealing," he added. 
 
However in most cases builders don’t follow that. In such cases, Gaggar says, they have suggested setting up an escrow where both parties can be signatories. "Here there is a possibility of bringing in a lender/investor to bridge the funding gap along with an independent monitoring committee to reinstate transparency and confidence in the process," Gaggar told ET.

Here’s how delayed housing projects can now be completed by
the builders

With 11 First Information Reports (FIRs) filed against three real estate developers- <keyword id="6361138" type="CITY" weightage="20" keywordseo="Unitech">Unitech</keyword>, <keyword id="2758718" type="COMPANY" weightage="20" keywordseo="Pal-Builders">Pal Builders</keyword> and <keyword id="822942" type="COMPANY" weightage="20" keywordseo="Vigneshwara-Developers">Vigneshwara developers</keyword>, for cheating home buyers, the stark reality of real estate has once again come to limelight. 
	 
	The police has registered five FIRs against Pal Builders while three FIRs each have been filed against both Vigneshwara Developers and Unitech separately. 
	 
	However, realty players are now questioning the reasons behind the agonizing delays that have cost them a fortune as well as their goodwill in the market. 
	 
	Tedious approval processes adding to realty players’ woes 
	 
	“Reams of newsprint have been dedicated to discussing the sufferings of consumers in the Indian real estate sector. Particularly, homebuyers’ woes related to late delivery of projects, deviation of housing projects from promised quality, additional payments due to change in apartment area and inadequate protection of their rights have been well-documented. The question that invariably arises is whether the developer is at fault, or whether larger market forces beyond the control of developers are at play,” said Anuj Puri, country head for JLL India. 
	 
	According to Puri, the tedious and prolonged procedure for getting innumerable approvals adds to the time taken to complete a project. He explained that any delay in obtaining approval required before the launch of a project to the delivery of it. 
	 
	“Delays here will cause cascading delays in delivering the project as per the promised time. Before a project is officially launched in the market and offered to buyers, there are myriad approvals that a developer needs to obtain from the state and central agencies and ministries. In any business, the longer raw material is held, the higher is the holding cost – which, in addition to interest costs in case of borrowed funds, causes an increase in the overall price of the finished product,” he explained. 
	 
	Commenting on the issue of rising costs, Puri noted that at present, a builder has to get 57 different permissions to actually start a project, which takes up nearly two years. “During this time, the cost of acquisition or even just holding the land for a project rises. Builders already have to cover external and internal development charges, license costs and often charges for change of land use from various departments, which have also risen. Cost of construction has gone up by more than 50%, as well,” he added. 
	 
	Changing norms behind skyrocketing project costs 
	 
	Besides the cost incurred on myriad of approvals, sudden changes in the real estate norms also result in the skyrocketing costs of the projects. “There are readily recallable examples of how abrupt changes in regulations governing real estate development can work against both developers and buyers. The revisions made in the DCR regulations in the Mumbai Metropolitan Region a couple of years ago caught the industry unawares, and added to development costs by about 15%,” he highlighted. 
	 
	Nevertheless, industry players have admitted that there have been instances where a developer has deliberately delayed the delivery of a project. “Yes, there are many cases, wherein it has been found that a builder deliberately delayed the project as the revenue generated in one project, has been used in launching another project,” said a residential property broker requesting anonymity. 
	 
	The challenges for the real estate buyer do not end here. Even after getting the possession of the property, a home buyer can see stark differences between the promised quality and the quality delivered by the developer. 
	 
	“A change in the apartment area after buying from the developer can occur if a change in project plan is necessitated due to a design or approval issue. A deviation of up to 10% is usually acceptable – for a higher deviation, a customer must definitely seek legal recourse. That said, project deviations can also happen because of structural deficiencies of the overall system, wherein rules are being made by the governing authorities in a reactive manner rather than on a proactive basis,” stated Puri. 
	 
	Any recourse for home buyers? 
	 
	So, what recourse does a home buyer have? According to industry players, a consumer can any day approach the consumer court for redressal of his grievances. However, experts believed that the current legal recourse is not adequately equipped to offer complete protection to real estate buyers. 
	 
	“The Real Estate Regulation and Development Bill - long languishing on the policy drawing board and still under consideration by the government – was intended to offer vastly enhanced protection to buyers. However, after the most recent revisions to RERA, it seems that it will in fact now be less protective towards buyers. While the bill aimed at providing an alternate redressal mechanism, the new provisions are talking of no recourse to other consumer forums. This can, in fact, lead to pressure on this regulatory body in terms of an increased log of cases, though it will reduce instances of multiplicity of suits,” asserted Puri. 
	 
	Until complete protection is not offered to home buyers, buying a property continues to remain a murky affair. As of now, Prime Minister Narendra Modi’s dream to provide affordable housing for all by 2022 will remain a distant dream!

Is Indian realty sector
in need for a makeover?

In the backdrop of <a href="http://www.businessinsider.in/searchresult.cms?query=NCDRC&amp;sortorder=effectivedate">National Consumer Disputes Redressal Commission</a> (NCDRC) penalising builders such as <keyword id="6354937" type="COMPANY" weightage="20" keywordseo="Jaypee">Jaypee</keyword>, <a href="http://www.businessinsider.in/searchresult.cms?query=lodha+group&amp;sortorder=effectivedate">Lodha Group</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=unitech&amp;sortorder=effectivedate">Unitech</a> over project delays, <a href="http://www.businessinsider.in/searchresult.cms?query=home+buyers&amp;sortorder=effectivedate">home buyers</a> have got a hope that their grievances will also be heard now. 
 
Cases against builders are flooding now after NCDRC penalised <a href="http://www.businessinsider.in/searchresult.cms?query=jaypee&amp;sortorder=effectivedate">Jaypee</a> for delaying its Kalypso Court project in Noida. 
 
The disputes commission has told Jaypee to pay 12% interest for the delay and to complete the project by July 21. In case Jaypee fails to do so, it will have to pay Rs 5,000 per day per home as a penalty till it hands over homes to the buyers. 
 Earlier, Mumbai-based builder <keyword id="46877" type="COMPANY" weightage="20" keywordseo="Lodha-group">Lodha group</keyword> was also told to refund Rs 1.02 crore to a buyer with 18% interest. 
 Even Parsvnath Developers refunded the entire amount paid by around 70 <keyword id="6371902" type="UNKNOWN" weightage="20" keywordseo="home-buyers">home buyers</keyword> in its Parsvnath Exotica project in Ghaziabad with 12% interest for failing to complete the apartments on time. 
 
"It is positive that NCDRC is giving enhanced compensation that will not just encourage home buyers to come forward but also act as a deterrent to builders," lawyer Sahil Sethi, who is handling cases against Jaypee projects, told ET. 
 
Lawyers say due to increase in these <a href="http://www.businessinsider.in/searchresult.cms?query=realty+projects&amp;sortorder=effectivedate">realty</a> cases, the hearing time has also increased from two to three days to at least 25 days. 
 
Dharmesh Jain, president of developers' body MCHI-CREDAI, told ET, "Delay doesn't benefit anyone, be it homebuyers, developers or even the government. Homebuyers, by all means, should approach authorities if there is a case of deliberate delay. But if the reason for such delay is permissions then that also needs to be considered.” 
 
Industry experts point out that most of the projects get delayed by a year and even two years. 
 
Meanwhile, home buyers have also been organising protests over delays, for instance, in Gurgaon, the Emerald Hills Owners Welfare Association held a protest against builder Emaar MGF for delaying possession. 
 
(Image: Reuters)

Cases against builders are pouring after disputes commission begins penalising

Off lately, there has been uproar in the <keyword id="1412996" type="UNKNOWN" weightage="100" keywordseo="Indian-real-estate-market">Indian real estate market</keyword> about property builders being criticised for not delivering their projects on time, and several home buyers have taken the <a href="http://www.businessinsider.in/Home-buyers-fighting-fraud-builders-in-courts/articleshow/50575376.cms">legal route</a> to handle such builders. 
 In one such case, the National Consumer Disputes Redressal Commission (<keyword id="103254" type="ORGANIZATION" weightage="100" keywordseo="NCDRC">NCDRC</keyword>) has passed a landmark judgement and imposed a penalty of 12% per annum on <keyword id="45043" type="COMPANY" weightage="100" keywordseo="Jaypee-Group">Jaypee Group</keyword>. The penalty has been imposed because the Noida-based builder delayed the possession of homes to buyers in the <keyword id="3355694" type="UNKNOWN" weightage="100" keywordseo="Kalypso-Court-project">Kalypso Court project</keyword>, located on the Noida-Greater Noida expressway. 
 
The order dated May 2 has also directed Jaypee Group to hand over the possession of apartments to buyers by July 21, and if it fails to do so, a further penalty of Rs 5,000 per flat per day will be imposed until the completion of the project. 
 
Also read: <a href="http://www.businessinsider.in/Delayed-deliveries-from-builders-can-mean-tax-loss-of-lakhs/articleshow/50652618.cms">Delayed deliveries from builders could cost you lakhs in tax losses</a> 
 
Not only this, the builder has also been directed to provide adequate parking space in the project and refund the excess amount that was collected from customers for parking slots, and that too with 12% interest per annum from the date of the charge. For this, the commission has cited the reason that builders are not supposed to charge buyers on increase in super area of an apartment after construction without prior consent from the buyer. 
 
As per property research firm Liases Foras, more than half of the real estate projects in India have been delayed by more than a year, and about 25% of them are delayed by over 36 months. 
 
Talking of the project, it was launched in 2007 and was supposed to have 16 towers, with a deadline of the year 2011. However, even five years later, most of the towers have not been completed, and only five towers have been allotted to buyers. 
 
Also read: <a href="http://www.businessinsider.in/These-four-cities-offer-the-best-luxury-homes-to-home-buyers/articleshow/51998476.cms">These four cities offer the best luxury homes to home buyers</a> 
 
It was last year that another builder <a href="http://www.businessinsider.in/Once-bitten-twice-shy-Realty-developers-learn-from-Unitech-case-to-be-more-realistic-now/articleshow/50589445.cms">Unitech</a> was asked to pay 12% penalty to homebuyers in the Unitech Vistas project located in <a href="http://www.businessinsider.in/Can-Gurgaons-property-market-really-pick-up/articleshow/50483172.cms">Gurgaon</a>, but the order got a stay by the Supreme Court later. 
 
<a href="http://www.magicbricks.com/mbphoto/property/cropped_images/2015/Aug/27/Photo_h600_w900/17576807_8_Project-Photo-38-The-Kalypso-Court-Noida-5021510_480_1366_600_900.jpg">Image source</a>

You Searched For "Unitech Builders case" and got 6 results

Once bitten, twice shy! Realty developers learn from Unitech case, to be more realistic now

BI India Bureau

Home buyers are now fighting fraud builders head-on

BI India Bureau

Here’s how delayed housing projects can now be completed by the builders

Suchayan Mandal

Is Indian realty sector in need for a makeover?

Purba Das

Cases against builders are pouring after disputes commission begins penalising

BI India Bureau

Jaypee group fined with 12% annual penalty in Noida’s Kalypso Court project

BI India Bureau

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