Their Story. Still waiting for their shelter

In March, the Real Estate Regulation Bill finally got Parliament’s nod. This provides much-needed legal protection to home buyers who have, for long, been at the mercy of builders. The law could also aid thousands of hapless home buyers awaiting handover of their houses for years. We spoke to a few home buyers who are suffering this pain.

Thirty-four-year-old Shiraj Kavathar, a Mumbai-based marketing professional, booked an apartment at DB Realty’s DB Ozone project in Mira Road in 2010. Married, with a kid, he hoped to move into the apartment in 2012. It’s 2016 and he is still waiting. Shiraj says, “The company began extending the handover date every now and then. Till now, there is no firm word on when it will give us possession.”

In another corner of the city, at the Hubtown Greenwoods project in Thane, 38-year-old Nafisa Barodawala faces a similar predicament. In 2009, Nafisa, a corporate finance professional, booked a flat which was to be delivered by November 2011. There’s no sign of it yet. Nafisa says, “After November 2011, they started a series of postponing of the possession date. That too, not proactively, but always on a reactive basis, when we asked about the delay.”

Across the country, in Noida, Amit Amora, married, with a kid, is also waiting for the apartment he booked in 2010 at the Ridge Residency project by Today Homes Noida. The 33-year-old media consultant says, “Every time, they say four to six months, which is not ending. The construction is on but at a very slow pace. Some towers are ready. But the finishing work is not yet done. And it doesn’t seem like it is going to be done soon.”

Also in Noida, at Jaypee Greens Aman Phase 1, 37-year-old Lovekesh Vig and his 65-year-old mother Sushil Taneja Vig haven’t yet got possession of the apartment they booked in 2009; it was to be delivered in 2012. An Assistant Professor at JNU, Lovekesh says, “There is little hope. There’s no end in sight.”

The delay in handover has meant a lot of financial stress for home buyers, especially for those who bought it for their own residential use. Shiraj says, “I was hoping that I would get this property and not have to pay rent anymore. Currently, I am incurring both the EMI as well as rent.”

Amit rues, “My income increased over the years. But one thing didn’t change. I didn’t have a flat then, I don’t have one now. I still live on rent and also pay EMI on the home loan.”

Lovekesh is upset that his parents’ post-retirement plans have been thrown out of gear. He says, “My mother and I are co-owners of this apartment. My parents had planned to move into the house after their retirement. They have been renting an apartment and pay high rent. They are retirees living on pension. My mother used her Provident Fund money to pay off the home loan.”

Nafisa, who was staying with her in-laws, says, “I paid EMI but since the possession was not given, did not get the tax deduction on the interest amount. My cash flow was affected.” The recent Budget has allowed tax deduction of home loan interest if construction is completed within five years (three years earlier) from the loan disbursement year. But with delays extending even beyond five years, many buyers will still lose out.

When buyers sought explanations from the builders, they usually hit brick walls. Nafisa says, “The Hubtown management comes up with vague ‘reasons beyond our control’ excuses, sometimes municipal permissions, sometimes sand issues, etc. The latest is that the company is trying to raise funds, and until that is complete, it cannot tell us the possession date.”

Shiraj’s experience is similar. He says, “DB Realty says there was lack of construction material and stuff like that, and is not willing to explain in detail.” “Unforeseeable circumstances” is Jaypee Greens’ explanation in the delay letters that Lovekesh gets regularly.

Aggrieved home buyers don’t buy the builders’ alibis and think they are diverting funds. Amit says, “From my sources, I know that the builder has invested a lot of money in the solar power sector.” Shiraj points out, “DB Realty has other projects in South Mumbai where it is offering chopper rides to show buyers the harbour view. On the other hand, for DB Ozone, it claims lack of finances to complete the project. ” Nafisa is scathing, “Hubtown which says that it doesn’t have the funds to complete the balance 10 per cent of the work at the Hubtown Greenwoods project starts new projects in different parts of Mumbai. These are premium luxury projects.”

Home buyers pay heavy interest cost if they delay payments to the builder. But the reverse does not seem to hold true. Compensation, if at all, for delay in handover is a pittance. Lovekesh says, “The penalty for delay is a paltry ₹5 a square foot for each month.”

Shiraj says, “There is a mention of 12 per cent penalty in the contract. But it is ambiguously worded. So, if there are issues beyond his control, there is a provision for the builder to take his own time to finish the project. The builder is using that point and saying that he is not going to compensate anyone.” Nafisa says, “For the builder, there is no penalty for delays. But the buyer is liable to pay interest charges for late payment. Not a word was allowed to be changed in the agreement.”

Stranded buyers are also not able to exit at a good price.

Amit says, “Rates have escalated over the years. I bought the house for close to ₹30 lakh. A similar house in another project that has been delivered is now being sold at close to ₹70 lakh. But in my case, it’s not happening. As long as it is under-construction, nobody is going to look at it. Because there is always the scare whether it will even be constructed fully.” He adds, “The market for under-construction properties in Delhi-NCR is dead, no matter how big the builder.”

Some builders offer to refund the amount paid by buyers along with nominal interest. But buyers are not biting, given that property rates have risen sharply over the years. They see this as an attempt by builders to ease out old buyers and get new ones at higher rates.

Desperate buyers have been running from pillar to post for relief. Lovekesh says, “There is an association for Jaypee Greens Aman 1 and we are planning legal action.” Amit says, “We have sent the builder legal notice. We have complained to government bodies, UP government, NAREDCO, CREDAI, Narendra Modi, everybody.”

Shiraj says, “After DB Corp faltered on its March 2016 commitment, we started a Twitter and media campaign, and have taken legal recourse too.” He adds, “I am evaluating whether to go to the National Consumer Redressal Forum or the State Commission.” Nafisa says, “About 100 customers filed a case long time ago; they expect a final hearing in August. I am contemplating legal action very soon.” But she adds “The legal process could go on for years on end.”

In hindsight, Amit says, “If I had a choice, I would have bought a ready property. It was the biggest mistake of my life to buy an under-construction property, thinking it is coming cheap.” This is a sentiment that Smita Tripathi, a journalist waiting for her house at Logix Blossom County, Noida, agrees with. She says, “We would definitely have opted for a house that was ready. There would have been peace of mind.”

The recently passed Real Estate Regulation Act provides safeguards to home buyers. Rules to prevent fund diversion by builders and equitable penalty clauses are among the buyer-friendly features in the law which will effectively come into play a year from now. Under-construction properties will also come under the law’s ambit to the extent possible, says Ashutosh Limaye, Head - Research at realty consultancy JLL India. This should provide stranded home buyers access to the appellate tribunal system and quicker redressal. Shanthi Kannan, an ex-journalist, who faced handover delay of her apartment in Chennai by Hiranandani Builders some years back, feels that though the new regulation is consumer-friendly, buyers, due to precedents, may still be wary of getting stuck in delayed projects. Ergo: effective implementation of the Act is imperative.

On the delay in handover at Hubtown Greenwoods, Keval Valambhia, Vice President (Operations), Hubtown Ltd says, “All approvals required to complete the construction were only received by October 2015. Work has progressed as per the approvals received in phases.” He says that Hubtown has not passed on construction cost escalation to buyers and that fit out possession for a few apartments has started.

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