Timely Possession can Boost Real Estate Market

Late delivery and Possession of flats is hampering the growth of real estate market in a big way—if developers were to stick to the construction schedules promised in their brochures, the sector could reap rich dividends.

Some builders are not ready to change, especially when it comes to timely delivery of flats. Shashi Jha, a Delhi-based scribe, could not believe his eyes when he visited the construction site of the project where he had bought a flat eight months ago—there was hardly any work to show. When he took up the matter with the developer, he was given oodles of assurances. Two months down the line, nothing has moved on the ground.

This is not the story of Jha alone. There are hundreds of buyers out there suffering endless agonies waiting for their flats to be delivered, even years after making their down payment and the EMIs. And, builders—big and small—do not seem to care. They promise the moon to their customers and once they seal those deals, they disappear from the scene, only to emerge now and then to dole out excuses and assurances. To add to the woes of customers, builders do not offer compensation for project delays, and there is no mechanism in place to make them toe the line.

What is the solution? An expert reiterates the universal panacea that every realty watcher has held out over the years—a regulator. But, as usual, the government is unmoved. While every major sector in the market comes with a regulator-power, telecom, banking—the real estate sector has been left out in the cold.

While my heart goes out to the poor customers who suffer owing to a few realty players betraying their trust, I feel there are several reputed developers in the market who normally stick to their delivery schedules. People must verify the track record of a developer before buying into his project. At the same time, customers should give some breathing space to genuine builders to finish their job and not pounce upon them if they fail to deliver on the dot-given the market conditions, a delay of two-three months can easily be condoned,” Alimuddin Rafi Ahmed, CMD of ILD Group.

However, most experts are agreed that if realty companies deliver their projects on time, the market can see better days again.

A recent study clearly proves the point that while buyers are booking their flats, developers are failing to deliver them on time, and this is one reason why buyers are visiting the resale market to buy their house. PropEquity, a real estate research firm, says in a study that the performance of the NCR-based developers is hardly impressive when it comes to delivery of flats. The report claims that only 21,371 residential units have been delivered until July, out of 91,558 units promised-a rate of 23%. This is a dismal show by any standards.

It is time that realty players put their act together and deliver flats at the promised time. Have buyers deserted the market out of fear that they would not get their booked flats on time? While there is no marked trend, a large number of prospective buyers are certainly shifting their focus to resale properties. “As some builders are not giving possession of flats to their customers, the resale market is improving. Today, hundreds of people-first-time buyers-are considering old properties.

Apart from poor delivery schedules, there are many other issues that deserve immediate attention of the stakeholders of the realty sector. The national consumer helpline is daily inundated with a barrage of calls from harassed buyers of flats and plots. The complaints are wide-ranging and clearly indicate that all is not well with realty firmsin general, many firms seem to look the other way whenever their customers face some trouble.

Realty firms must set up customer-care desks that respond to the issues raised by their customers. The number of complaints we receive proves beyond any doubt that we need a regulator for the sector. The present situation is alarming.

Ajay Singhal, director of Avalon Group, says: “While it is true that realty firms should and can improve their internal redressal system to solve the issues of their customers, it is certainly not true that we trash all the complaints of our customers. How can we take them for granted? No realty firm can survive in the market by ignoring the legitimate concerns, demands, and complaints of customers.

Realty watchers reiterate that if the current chaos continues in the realty market, people will have no choice but to buy property from the resale market. The major advantage of a resale flat is that one can pick and choose the location. This is a huge advantage of the resale market. The resale market also has a large number of newly-built houses owned by investors who are eager to sell.

Resale market offers two types of flats: ready-to-move-in flats and flats in projects under construction. “One reason for buying a house in the resale market can be non-availability of new projects in the area where you want to settle. New residential properties tend to be scarce or nonexistent in many central locations,” Om Ahuja, CEO (residential service) of Jones Lang LaSalle India (JLL), says. A property available in the resale market is not necessarily cheaper than a new one-unless, of course, the structure is old.

If the project under construction is close to completion, the price difference will be minimal. The difference will be more in the initial stage, but in such a case the risk will also be higher. “I do not think it is a bad idea to buy a resale flat. But, one is unlikely to find the facilities and amenities that are available in newer projects in an older building. If one buys an old house from the resale market, there may be additional expenses in repairs and renovations to the masonry, plumbing, electrical wiring and fittings, etc.

S K Gambhir, an advocate and expert on realty matters, says: “In case of delay, the builder is liable to refund the amount paid with interest (for the period of delay) as there has been a breach of contract.” The Gujarat Ownership Flats Act, 1973, for instance, mandates builders to mention the possession date in the agreement. “Any default would attract penalty under consumer protection act and the flats act. Some states have such acts in place to protect the common man, as housing is a state subject.