Tag Archives: Builders cheating homebuyers

Vicious circle & challenges of best practices

Posted on by Track2Realty
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Bottom Line: It is a known fact that the projects get sanctioned easily due to the bonhomie between developers and the authorities. And the quality of construction and other grey areas go unquestioned.

Best practices, Best practices in Indian real estate, Professional practices in Indian real estate, Builder buyer conflict, Builders cheating buyers, Builders harassing buyers, Homebuyers protest against builders, Consumer grievances in real estate, Consumer complaints in real estate, Indian real estate news, Real estate news India, Indian realty news, Indian property market news, Track2RealtyCompletion Certificate and the Occupation Certificate also have a price tag attached where the violations and flouting norms are conveniently ignored. Therefore, to the scores of financially and emotionally bleeding homebuyers the developers continue to bully with a gesture of “take it or leave it”.

Most of the builder-buyer agreements are heavily loaded in favour of builders and the buyer does not get to see the agreement draft till one has paid the booking amount. 
Their disillusionment is reflected with the rise in the number of complaints that has challenged the growth of the sector.

Delivery delays, mismatch in area, changes in structure or designs in a project and developers going back on other promises have been quite common. These issues have given rise to consumer activism, in courts and outside. The Competition Commission of India (CCI) slapping a fine of INR 630 crore on DLF gave some hope to the buyers.

Supertech also bore the brunt of buyers’ wrath when the Allahabad High Court, on a petition by its residents’ association, ordered demolition of two towers in its Noida project, Emerald Court. Builders like Unitech, Jaypee Group, Parsvnath etc are repeatedly being reprimanded by various courts for non-delivery of projects.

JC Sharma, VC & MD, Sobha Limited agrees that home buyers expect developers to be transparent in their dealings, deliver their units on time and with the best quality of construction. The general perception in the market is not very positive and that is why the government has introduced the Real Estate (Regulation and Development) Act. According to him, some of the best practices that the developers should adopt are improved quality, customer-centricity and transparency. It is imperative that the focus should be on corporate governance, accountability and timely delivery of projects.

“In order to win the trust, full-disclosure policies should be adopted, making all information regarding project approvals, registration and process easily accessible. Another practice that is still evolving and has gained the attention of leading real estate companies is Corporate Social Responsibility (CSR). There is also an increasing level of consciousness among the developers to construct green buildings in order to protect environment. These practices will not only strengthen bonding with various stakeholders but will also win their immense trust,” says Sharma.

Nikhil Hawelia, Managing Director of Hawelia Group suggests the existing perception can only be changed if the developer fraternity adopts practice of transparency and streamline their professional intent. Foremost the developer should draw a limit to the quantum of work that is under their control for a certain business cycle. The major concerns like delay in possession, quality issues etc directly or indirectly occur because of over-limit & uncontrollable growth, especially in the North region of the country. Involvement of higher management at all verticals is crucial to meet up the commitments and promises.

“The other aspect which causes huge gap between the developer and consumer is “insufficiency in being answerable to the customer”. Consumer connect is by and large a missing link in direct interface with home buyers. The developer should take extra care to face and answer all types of queries of the customer as well as third parties to gain the confidence of the market. Indian real estate has to go a long way vis-à-vis other global emerging markets as majority of the Indian developers are still not practicing the best,” says Hawelia.

An eco system that empowers the buyer with equal terms and conditions as those enjoyed by the builder will definitely change the outlook of buyers about the sector and its practices. Today, the reality is that despite liberal payment plans and discounted deals in the market, people are yet not ready to trust the developers. They have burnt their finger in the past due to various hidden clauses and arm-twisting after making the first payment.

By: Ravi Sinha 

Next: Indian homebuyers struggling for basic consumer rights

Miles to go for best practices in Indian real estate

Posted on by Track2Realty
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Bottom Line: The understanding of best practices is very archaic in the Indian real estate. The intent is even more conservative and hence Track2Realty observes that the sector has miles to go before they can look forward to adopt some of the globally accepted best practices.

Best practices, Best practices in Indian real estate, Professional practices in Indian real estate, Cheating in real estate, Builders cheating buyers, Consumer complaints in Indian real estate, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2Realty, Track2Media Research“Once the customers become captive, the builders start fleecing them. I have already held in the case of DLF that this conduct is called ‘after market abuse’. This is a fit case of abuse of dominance by the opposite parties,” said CCI member R R Prasad in a dissenting order 

FIR against Vatika Group MD, three others on fraud, cheating charges 

Orbit Corp MD Pujit Aggarwal arrested by EOW in Rs 52 crore cheating case 

Manesar land scam blew lid off government nexus with private builders 

Mumbai’s ‘One Avighna Park’ builder Nish Developers booked in INR 2,000-crore fraud case 

ATS, Unitech, Amrapali among the biggest land defaulters to Noida Authority 

Supreme Court snubs Supertech asking the builder to “sink or die but pay back the buyers” 

Unitech mired in litigation in at least five forums—Company Law Board, NCDRC, Supreme Court, High Court and also state consumer forums 

CCI orders probe against Jaypee Group through majority orders in two separate cases involving real estate projects in the national capital region for alleged abuse of dominant market position and imposition of “unfair” conditions on buyers 

Noida builders flout norms, ‘use ground water for construction’ 

What would you make out of a business where the above headlines continue to haunt the home buyers on a routine basis? While the overt consumer activism, social media outcry, media trial and judicial intervention forced the sector to change its tune to Best Practices on the face value, there is a chasm between the lip service and the practices on ground. It seems the developers’ comfort zone lies in to operating in the dark age.

The developers are by and large living in denial. The deep rooted psyche is that once the market conditions improve the buyers have no choice but to run for an asset class that is not only need-based but also a business where the demand far exceeds the supply. This medieval thought process is in fact the biggest roadblock in the way of best practices gaining ground in the Indian real estate.

Best practice is something that the sector never bothered to adopt. But the slowdown and nose diving sales graph are clearly indicating that the developers have no choice but to stop sulking and blaming market conditions for poor sales and start accepting the hard truth.

The buyer today has lost all confidence in developers. The only way this can change is by simple changes the developers make in their business practices that will bring that confidence back. Before they expect market conditions to change, they have to change their own outlook first.

Privately some of the developers admit there is neither any incentive for developers to adopt best practices nor are there penalties for those who do not follow such practices.

A section of analysts also point to developers’ facing challenges in adopting the best practice in the sector. Issues like multi-partner projects; inability of the developer to execute large projects because of their organizational limitations; leverage on finance – personal equity versus project cost; delivering large projects without competent team of vendors; and huge finance cost are some of the issues that force the developers to compromise the professional integrity. 

Devina Ghildial, former MD, South Asia – RICS points out that the success or failure of any real estate and construction project can largely be attributed to money, material, manpower, machinery and management. The collaboration of these factors along with effective project management that encapsulates planning, scheduling and budgeting are critical to project delivery. However, the real estate and construction sector in India for long has been fraught with several long-standing issues such as adequate reforms, coupled with changing market dynamics that pose as bottlenecks in project execution. Liquidity concerns, rising costs and lack of specialized manpower are just some of the challenges that developers have continued to grapple with.

“With the evolution of a global marketplace, international property markets have become intrinsically linked and there are international consequences to consider. Then there are also local factors that affect the performance of the sector. The future success of the Indian real estate and construction sector lies in its ability to regulate its operations and professionals. It is also widely felt that awareness and introduction of internationally recognised and locally relevant best practices such as common area measurement and valuation standards can contribute towards uniform practices and lend quality assurance and credibility to the sector,” says Ghildial. 

By: Ravi Sinha

Next: Baggage of trust deficit & best practices

Indian homebuyers struggling for basic consumer rights

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: While the matured property markets are adopting evolving best practices, the Indian market is not offering even the basic consumer rights to the homebuyers. 

Homebuyer Confusion, Confused homebuyer, Homebuyers grievances, Homebuyers' legal options, India real estate news, Indian property market news, Track2RealtySome discussions about best practices in the Indian real estate has started because today the investors also do not want their money to be locked in an asset that is neither growing nor is likely to get delivered. Worse even, there is no authority or court in India that has been successful in getting a stalled project restarted or in forcing a bankrupt builder into selling his assets to compensate his allottees.

AS Sivaramakrishnan, Head – Residential Services, CBRE South Asia maintains that product quality and product delivery, along with pace of construction, are becoming the current key words in customer satisfaction for home purchases. Especially with the implementation of the Real Estate (Regulation and Development) Bill, these practices will become even more important for development firms to keep in mind.

“A key area of differentiation between mature global markets and the housing market in India lies in the fact that all aspects of developing and maintaining a residential project are handled by professional firms, unlike the case in India. Developers should increasingly focus on their product rather than on marketing paraphernalia, which will help in controlling market perceptions,” says Sivaramakrishnan.

Vineet Relia, Managing Director, SARE Homes feels transparency, fair norms and delivering on promises made either verbally or in the builder-buyer agreements are imperative to change negative perceptions. Moreover, instead of a commodity-selling approach, developers should adopt a value-based, professional approach that keeps customers fully informed about all the benefits of investing in a particular project. A professional approach can ensure all unique project propositions – location, amenities, pricing, after-sales service and other salient points – are made crystal clear to customers. Transparency in all dealings and practices is required to transform perceptions about the Indian real estate industry.

“Best practices in Indian real estate were majorly non-existent, until recently. Moreover, each market has its own drivers and challenges, which differ from other markets. Comparisons can therefore be odious and misplaced. But the best practices used by a few professional developers compare favourably with the best globally, including that in emerging markets. But consistent performance, proper pricing of products and excellent service at all times – before, during and after sales – can play a pivotal role in the success of any developer and such practices are bound to gain ground in the days ahead,” says Relia.

The need of the hour is to take lessons from streamlined markets abroad and introduce comprehensive disclosure norms. For instance, US home buyers are entitled to receive a number of disclosures during the course of the house purchase.

These disclosures give a homebuyer a somewhat transparent and fair picture of what he is getting into. On the other hand, Indian home buyers sign agreements that are one sided. They even get unpleasant surprises in terms of hidden costs.

Analysts believe bulk of the challenges or the evils can be addressed if the RERA is implemented sincerely and effectively. The judiciary is getting more and more conscious and discharging consumer related cases quickly and in most cases with a consumer protection mindset.

While the homebuyers in mature markets may be having a level playing field, the Indian buyers are struggling for the most basic consumer rights. The demands of the buyers in this part of the world are not very unrealistic.

Some of the common issues are: 

Title assurance and right to see all approvals in place

Rates based on carpet area

Right to a full refund within 30 days of booking

Equal penalty for delay in completion

No change in area bought

No hidden charges or escalation charges

Separate escrow account mechanism

Free first transfer

Fair agreements with indemnities for delays, poor workmanship etc.

Open and transparent communication throughout the project period

These are not very unreasonable expectations and can be achieved without any extra burden, if only the developer is committed to adopt best practices. However, that is easier said than done and Indian real estate has a long way to go before we claim to be at par with the developed countries.

There is a lot that needs to be done at government level as well to instill confidence in homebuyers. Land titling, title insurance, quick judicial remedies, standardisation of numerous norms etc are areas yet to be addressed.

By: Ravi Sinha