‘Govt should protect early flat buyers from unfair developers’
Feb 24, 2014
Source : The Times of India


MUMBAI: Rogue developers around the city are making a killing while victimizing people who book their flats early. In Bandra (West), a developer recently refunded money to buyers who booked flats three years ago. The building, located in a bylane, had already reached up to the eighth floor. Market sources said the developer may sell the project to another builder, while purchasers are left in the lurch.

At a development in Mahalaxmi, people who booked luxury flats have the option of paying more or taking a refund with interest. The developer plans to redesign the project under the amended Development Control Rules. Under these, the developer must pay a hefty premium to the BMC for extra floor space index (FSI).

At Worli, a prominent slum redeveloper has changed the storyline, much to the chagrin of his clients who had booked flats five years ago. He amended the building plan and asked some buyers to relocate from higher floors to a lower level. Those who booked in the east wing with a better view are being told to shift to the west wing. Their carpet area has changed, and the developer has demanded a huge sum for club membership.

In Andheri (West), a leading developer who had started bookings three to four years ago is refunding money with 12% interest because he plans to re-launch the project. Flat buyers face a similar dilemma in a Sion project launched two years ago. With property rates increasing, the builder feels the building could fetch more now from new clients.

Market sources said the most blatant case is that of a residential project in Kalina, where a leading international bank had booked 100 flats for its employees. "Purchasers have been told to take back their deposit. The project will either be re-launched or get sold to another developer," said a source. "Agreements were signed and documented. Buyers had paid Rs 50 lakh for a flat and Rs 9 lakh as club fee."

In Thane, about 40 middle-income people are down on their knees because the developer has refused to hand over the possession of the flats they had booked despite the building getting an occupation certificate. "The developer delayed the project and now wants more money, which these people cannot afford," said a leading property expert who was approached by the buyers for advice.

Industry insiders said these instances amount to unfair trade practice. Victims of such cases can take the legal route, but not many do so because it is time-consuming.

"One has heard of cases where some developers, quoting the new DCR, ask for payments other than agreed upon," said Pranay Vakil, chairman of Praron Consultancy (India). "This is unfair because these are signed and registered documents which have to be honoured by developers." The premium which developers pay the civic administration for extra FSI under the new DCR has also forced many developers to rework their costs.

"Premium for fungible FSI is an additional cost which was not visualised earlier as part of the project cost. This cost is now being passed on to the buyer who has honoured or agreed to honour all obligations under the agreement. The government should intervene and provide protection to such buyers," said Vakil.

Property expert and advocate Anil Harish said most purchasers do not want to fight the builder. "They can file a case in the consumer court. But people don't have the time and do not want to take that risk," he said. Harish recounted that he had heard of a case where a builder changed the flat area and demanded the buyers pay extra for the additional area. "But a group of 15 buyers fought back and sent a legal notice to the builder. They then settled to pay the old rate for some of the additional area and the new rate for the remaining," he said.

Pankaj Kapoor of property research firm Liases Foras said the buyer is at the mercy of the builder, especially if the flat is booked at the pre-launch stage. Many builders open bookings when even the basic building plans are not approved. This practice is illegal and yet rampant.







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