HYDERABAD: Consumer forums have filed complaints saying they have not been given possession of their dream house even after paying the lump sum down payment and all those Equated Monthly Instalments (EMIs).
It is distressing to wait endlessly with no word of consolation coming across. Lakshmi Prasanna moved into an apartment in the Bachupally-Nizampet locality recently and she had to face a delay of 14 months before she could move into that dream house. “We have purchased a 2BHK for around Rs 22 lakhs, we started paying EMIs of Rs 15,500 from October 2012 and we had made a down payment of four lakhs rupees. We were supposed to move into the flat by January 2013. But we moved in just this month and there are many things, which are incomplete like the lift, which will take another two to three months. Even the staircase flooring work is not complete. We had to stay in a rented apartment 14 months longer and we had to bear the monetary loss as we did not receive any compensation from the builder.”
Delay in possession is not uncommon. There have been cases when the customers decided to opt out of the project. But when they did so the builder returned them the money after deducting a certain amount from the principal amount with no valid reason.
There are many such examples which can be cited, but why a project gets delayed is the question and how do builders cope up with the delay is important to understand. Sarath Babu, GM sales and marketing, Ramky Estates says, “According to our experience projects have been delayed because of several reasons such as the political scenario of the state and the US economy melt-down. There have been project delays because of the time taken to clear various approvals.”
“Delay in project launch escalates the overall budget of the project since the overheads have to be absorbed for more number of months. We cannot go back to the customers for it, the company has to absorb these costs. In case a customer wants to opt out due to delay in getting approvals we accept the cancellation and refund full amount,” adds Sarath Babu.
Ramu Vanaparthy, GM sales and marketing, Shanta Sriram Constructions adds, “A delay of six to eight months is natural because we have to get several approvals and NOC’s from the revenue department, urban land selling department, fire department, environment department, and also airport authorities if the building has more than five floors and so on. Then sometimes we face shortage of labour, shortage of materials or unavailability of building material like sand. At times, the projects get delayed because of customer’s preferences also. We request them to finalise on their specifications such as tiles, colour of walls and electrical fittings within 10 to 15 days. But they may take somewhere between two to three months also and we have to do regular follow ups.”
What if inspite of every promise made by the builder the customers do not get possession of their dream house, what is the way out? CREDAI national president C Shekar Reddy says, “We have a grievance cell where consumers can file their complaints if the builder is a member of CREDAI. If not, they can file complaints with civil court or consumer forum. Most of the builders keep a buffer period of three to six months to adjust delays. But if there is a delay beyond that, the builder should pay compensation to the customers and we are working towards it. Every builder who is part of the CREDAI has to sign a code-of-conduct, if there is a delay from the developer’s side they should compensate for it, we have been asking developers to incorporate this clause in the housing document. We try to clear complaints within 90 to 120 days.”
However, is there a way out where a win-win situation can be reached between the customers and builders? Shekhar Reddy explains some of the problems faced by the builders, and then goes on to explain the solution.
Shekhar Reddy says, “In some cases projects have been delayed because of legal problems, global problems, and political reasons, then marketing of the product comes down. Funding is another issue where only 30 to 40 per cent of project is sold, it becomes difficult for the builder to complete the project. But RBI has stringent rules and banks are not allowed to fund real estate projects liberally. If the banks can provide us funds, it will become easier for builders to complete the project even if 30 to 40 per cent of the project is sold at the launch. When a project gets delayed it is a big loss for the developer as the material cost goes up and salaries have to paid for a longer period. The builders are also consumers and it will become easier for them to give the product to the end consumer if the rules can be relaxed a bit.”
“Whatever restrictions need to be incorporated, the central government should make standard guidelines and pass it on to the state governments for implementation so that they can incorporate in building rules. We have a big list of NOCs and some of these are redundant, our policies have become out dated. This is our long term grievance, and the ministry of housing and urban poverty alleviation (HUPA) have constituted a committee for streamlining of approval processes in real estate (SAPRE). We are also part of the committee, and we want to cut the delay. There are 40 government departments from whom we need to seek approval and there are around 150 tables that we need to go through. We talk about affordable housing, but when we waste money because of cost escalations due to delays, the whole point is lost. It is a national wastage. We have asked for online approvals and the HUPA has agreed to it, they have put it under Rajiv Awas Yojana optional reforms. Both Hyderabad Metropolitan Development Authority (HMDA) and Greater Hyderabad Municipal Corporation (GHMC) have given permission for online approvals and they are outsourcing so that approvals can be given faster,” adds Shekhar Reddy.