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Real Estate Law and Real Victims

Recently promulgated law to regulate real estate aims to curb dubious ways of builders and developers

Sudesh Verma
Publish Date: May 13 2016 5:22PM | Updated Date: May 13 2016 5:25PM

Real Estate Law and Real Victims

The recently promulgated law to regulate real estate aims to curb dubious ways of builders, developers and colonisers. Yet, it does not come to the aid of many homebuyers who have already been victims of these. Thus, Sudesh Verma makes a plea for the real estate regulators to use the law retrospectively and bring succour to harried customers in the real estate market  

The new Real Estate (Regulation and Development) Act, 2016, seeks to regulate builders and safeguard the interests of the future buyers of property. Yet, thousands of old buyers are stuck, confused and completely exposed to the greed and chicanery of the builders who promised them the moon but did not live up to the commitments made. The new law cannot come to their rescue since it is being applied prospectively. But something needs to be done by lawmakers to tackle this menace before it gives way to cynicism among the scores of affected people. 
Thousands of flat buyers in the National Capital Region (NCR) are victims of default by builders. These buyers have paid all dues but builders come up with one excuse or the other to not to handover the possession and delay it often endlessly. In some areas where possessions have been given, the promised facilities are lacking leading to lot of disenchantment among affected customers.
Policy and decision makers need to give urgent attention to these problems; otherwise this is likely to escalate into a major crisis something on the pattern of farmers’ suicide. Many of those who have paid the money have done it in search of their dream home and after selling off everything that they had. Now they have nowhere else to go. Authorities have stopped listening to them. None seems to have any solution for the harried buyers. 
In reaction some of them have started trolling celebrities who endorsed such dubious projects in anticipation that these VIPs would use their influence to pressure the builders. Recently, more than a dozen people shouted slogans against cine actor Anupam Kher, when he was in Delhi for a book launch, asking him to pressure the builders -- Vigneswara Developers. We are already aware how MS Dhoni was trolled for endorsing Amrapali Builders.
The buyers cannot be faulted for failure of the builders who renege from their promises. They entered into the business and fixed arbitrary rates in sheer greed. Before completing a project, they start three to four others using the money raised through the initial one. Eventually, low demands may not allow the projects to take off. The new Act has taken into account this problem. It has made a provision that at least 70 percent of the money taken from buyers will need to be kept in a separate account and would be used only in the project for which it is meant. This would ensure there is no diversion of funds, one of the major reasons for non-completion.
Absence of this provision in the past has made the buyers suffer. They paid trusting the promises doled out through various newspaper advertisements. These were credible names and none had the reason to doubt. Builders must realise that they have to shoulder the responsibility for the situation that has emerged out of their greed. They would not have transferred the profit to buyers had they made some. New rates due to agitation by farmers, change in pollution norms etc are sheer excuses that cannot logically be accepted. The buyer is not and should not be concerned about these.
The authorities cannot escape the blame for the simple fact that these started profiteering from sales of land. If the cost of a project has escalated, the authorities are also to be blamed. Earlier, lands were given to housing societies and people used to construct houses. The authorities started promoting builders since this meant easy money. While this cannot be proved, ask any builder in Noida and you would come to know that the money given to political and bureaucratic authorities under the table is almost the same as the circle rate. Imagine the cost of land being Rs 15,000 per square metre which would become Rs 30,000 in actual terms. This means that the builder has to manage money to pay bribe first rather than focus on construction. The authorities now cannot wash their hands off by putting the blame on the builders alone. Giving clearance etc is the preserve and domain of these authorities. 
The connivance between builders and authorities is deep. Whether there is change in the layout plan, or increase in FAR (Floor Area Ratio) or compounding of illegal construction, everything is up for sale. A buyer who buys a flat expecting that there is garden in the society would be in for a huge shock since the place meant for garden could well be converted into a multi-storey building. This means that the earlier layout plan that had the garden was to dupe the customers. They cannot do anything to deter this. They cannot afford litigation cost or an open fight with the builders who are a virtual mafia.
The banks that paid the loan also cannot shrug off their shoulders. There has to be due diligence before sanctioning any loan. Do they vet the payment plan that was heavily tilted towards the builders? Do they check if the construction-linked payment plan was faulty and favoured the builders? Banks are supposed to keep an effective check and ensure that customers are not cheated. They have their own battery of lawyers to know if a project is good or not. In most cases, the loans are arranged by builders in their premises showing that banks may be in connivance with the builders. 
Banks are not losing since they are getting instalments of the loans from the buyers on a regular basis. The buyer has paid to the builder and is paying instalments to the banks. His dream home has become elusive creating frustrations. He is still living on rents that add up to the already high cost of living. What a pitiable situation that he is paying instalments for the flat booked, rent for his present abode and has to move from pillars to post to ensure that the hope for the dream house does not die out.
You talk to any official or politicians off the record. They would have some sympathy for the builders too saying the market is bad. What they forget is these buyers do not mind when the builders buy latest luxury cars from the market even when they know that these were coming through their hard earned money and savings in the hope to get a roof over their heads. The costly advertisements in various newspapers and celebrity endorsement must have cost them a fortune. Now why ask them to bear the brunt of your own profligacy?
Lawmakers must act before it is too late. – The writer is BJP spokesman. He has earlier worked for The Statesman and NewsX Television. He has also authoured a biography of Prime Minister Narendra Modi. Views expressed here are his personal