Bottom Line: Best practices could not gain ground in a business that has legacy of trust deficit over the years; the defaulters being bigger players and not just fly-by-night operators.¬†
Most of the cases are not against the fly-by-night operators but industry‚Äôs untouchable top-tier – the likes of Jaypee Group, Unitech, BPTP, Emaar MGF, Parsvnath, Supertech and DLF.
Even when the court rules heavy compensation or a refund, the case just proceeds on to a new hearing. And the average home buyer then has nowhere to go, except camp outside the developer‚Äôs office or house, get shunted out by his bouncers and then be slapped with an allotment-cancellation letter for raking up the issue publicly.
In the last few years of the real estate slowdown, when the respective courts have snubbed the builder bullying time and again, the home buyers are yet to hear from these behemoths about how they plan to kick-start their stalled projects or how they plan to compensate their thousands of allottees for the emotional and monetary distress they have caused. If they are unwilling to self-regulate, when and how will the buck stop and with them?
Delivering promises made in terms of Quality, Amenities, Time Frame, Carpet Area etc pivotal to best practices¬†
Failure of judiciary to deliver timely justice compromises best practices¬†
Developers admit best practices neither earn incentive nor penalty¬†
Internationally recognised and locally relevant best practices such as common area measurement and valuation standards can lend credibility to Indian realty¬†
Builder-buyer agreements are one-sided; more often than not buyers get to see the document after paying the booking amount¬†
CREDAI Chairman takes moral high ground on the need to change; does not initiate any action against erring builders
Best practices demand formation of Society and executing Conveyance Deed within stipulated time frame from the date of Occupancy Certificate
Naushad Panjwani, Managing Partner with Mandarus Partners LLP agrees that Indian real estate faces trust deficit. This was prevailing on a rampant scale and developers got away scot free, largely due to absence of an effective Regulator like in other sectors (SEBI, TRAI, IRDAI etc); scarcity of organised funds for projects; nexus of developers-politicians-bureaucrats; and poor rate of disposal by courts plus lack of title insurance.
‚ÄúThese factors kept good business houses away from this sector. And hence the industry was characterised by many unscrupulous elements. For such developers, governance, customer care and reputation were least of the priorities. Things have started to change slowly. With RERA, easing of funds in the form of REITs, ECBs, FDI have attracted the attention of reputed business houses and customers alike,‚ÄĚ says Panjwani.¬†
The industry body Confederation of Real Estate Developers’ Association of India (CREDAI) has thus far failed to act against the erring builders. They had only been vocal with a resolve to suspend the members who have repeatedly gone back on promises to buyers.
Chairman of CREDAI, Geetambar Anand defends inaction saying that at least the sector has realised that they need to start looking for answers within their own firms. He nevertheless agrees, ‚ÄúThere has been mismanagement. It is unfortunate and bad luck that people made wrong decisions. So, they ended up earning a bad reputation. Without having the intention to cheat people, why are you branded a cheat? So, they want to rethink this and redo things the right way so that such things do not happen.‚ÄĚ
However, such innocent excuses do not cut ice with those who have lost their lifetime savings plus an additional burden of EMI to the banks. CREDAI has 11,500 members across India, and the clarion call of its President Geetamber Anand to clean the mess and bring back confidence in buyers’ minds has not gained ground.
Similarly, no one has ever heard of the much-publicised entry barrier to become a CREDAI member. It was earlier proposed that the member must have delivered 1,00,000 square feet of area and get recommendations from two developers who are already members. Also, the consumer grievances redressal forum under CREDAI is yet to win the trust of the home buyers.
‚ÄúThe realty sector earned a bad name because of some developers. We need to enforce discipline among our members and ensure a code of conduct, clearly specifying commitments and penalty provisions. Only developers who are serious about their business will be part of CREDAI now…. We are trying to bring in transparency and bridging the communication divide between buyers and developers,‚ÄĚ Geetamber Anand had earlier said. This was never followed in practice.¬†¬†
By: Ravi Sinha¬†
Next: Vicious circle & challenges of best practices¬†