Tag Archives: Homebuyers’ grievances

Poor consumer connect dent on Indian real estate

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: A Track2Realty study finds that the buyers hardly get to see the approvals obtained by the developers.

Homebuyers harassment, Project delays, Developers fault, Builders' high handedness, Real estate malpractices, Realty complaints, Homebuyers' woes, India real estate news, India property market, Noida property market, ATS, Amrapali, Supertech, Panchsheel,, Track2Realty, GaursonsA few ground realities that suggest real estate continues to be sellers’ market, more so with an opaque one.

8 out of 10 home buyers are not sure at the time of booking as to whether the developer has got all the mandatory approvals for construction

7 out of 10 developers refused to showcase even the project CC (Commencement Certificate) to the buyers

7 out of 10 buyers pay the due diligence fee to the lawyers to get the legal titles of the land, while developers only assure them verbally

9 out of 10 buyers have absolutely no idea about the fiscal management of the project and its execution feasibility

8 out of 10 buyers were persuaded by the lending banks to go by the verbal assurance of the developer

6 out of 10 home buyers really had to fight with the builder to get a copy of OC (Occupation Certificate) and CC (Completion Certificate) 

The above statistics says a lot about the way the home buyers have been taken for a ride. The developers in many cases do not have all the approvals in hand at the time of starting the booking the project. Many of them simply do not entertain the home buyers to showcase the approvals, even if they have obtained it.

Nothing hurts Indian real estate more than their inability to connect with the consumers and showcase them was is their legal right. The seeds of lack of trust in the minds of the buyers are sown at the time of booking itself as the developers do not find it necessary to showcase approvals, even when asked to, and it continues throughout the construction lifecycle.

The agony of the buyers continue till one fights for the Occupation Certificate and Completion Certificate. In Noida many home buyers have got the possession of the apartment and are living over there without the registry, as the developer has failed to get the OC for one reason or the other.

“I was simply told by the builder to take it or leave it when I wished to see the approvals and the legal title of the land. With no choice left, I made the payment of initial 20 per cent and the project has not yet started after two years now,” says a dejected Rakesh Mathur in Gurgaon.

Developers, on their part, assure that they have started interacting with the home buyers and they even address the website visitors and solve their doubts and queries which have started reflecting in their conversion ratio as well. But by and large addressing the consumer touch points is few and far between in the Indian housing market.

More importantly, the consumers are nowadays being pacified due to the fear of consumer backlash than a serious concern to address the grievances and be seen as a responsible and committed real estate brand.

Manju Yagnik, Vice Chairperson, Nahar Group defends that scenario is changing fast and the real estate has undergone a massive change in last one decade. According to her, there has been greater transparency and considerable awareness among the home buyers. Therefore, it cannot be agreed completely that consumer connect is a missing link and the developers refuse to show the approvals.  In fact, of late, social media and digital project promotions have effectively improved the transparency.

“There is a slight gap that exists due to certain conditions such as perception and lack of understanding on various facts which are beyond the control of the developer. These conditions will include lack of necessary infrastructure, complex real estate regulations etc. Consumers are less aware of the formalities and rights involved while purchasing a property. But these flaws can be overcome by creating better awareness among consumers,” says Yagnik.

However, Nikhil Hawelia, Managing Director of Hawelia Group admits that this is a prevalent market reality where the developers simply refuse to entertain the home buyers who ask so many questions. The idea is to simply have only that kind of buyers who could be handled easily. Since the market continues to be sellers’ market, most of the needy buyers just succumb.

“When I myself volunteered to showcase all the approvals and legal title to my home buyers in Greater Noida West they were all surprised. They had been witness to an altogether different kind of market reality. But in hindsight today I can say that those buyers have stood with me, even when the project was slightly delayed. As a matter of fact, some of them became my repeat customers as well,” admits Hawelia.

This any way is more of an exception than the market reality. The prevalent mindset of the builders is that why to entertain so much to the buyers and make them even more demanding. As a developer sums up the discussion, while requesting anonymity, “the more you try to be open with the buyers, the more they get demanding. We as the developers do not want one more party to arm twist us, as already the development authorities keep us pushed to the wall.”

No wonder, the homebuyers are not impressed with the poor consumer connect and opaque dealing of the developers. They are increasingly questioning their callous attitude and their frustration is vented out through protests and court cases. 

By: Ravi Sinha

Justice delayed and denied

Posted on by Track2Realty

Track2Realty Exclusive

Project delay, construction delay, Homebuyers' grievances, Builders' negligence, Housing delay & default, Consumer activism in India, NRI investment in India, Track2Media Research, Track2RealtyOne-sided builder-buyer contract, late delivery of the possession and poor quality of construction is an accepted reality in the Indian real estate. A prominent developer in Noida Extension is reportedly forcing its buyers to sign the modified apartment buyer contracts with extended possession date and reduced penalty for delay in handing over the apartments. “Otherwise, we are ready and willing to refund the entire booking amount along with 11 per cent interest, without any deductions,” says the forwarding of the letter sent to the buyers.

Builders often force homebuyers to sign standard contracts with clauses that stipulate them to pay 15-18 per cent (per annum) as penalty for late payment. The builders themselves agree to pay only Rs 5-10 per month per sq ft for late delivery, irrespective of the price of the apartments. The fiscal implications of the delay and the opportunity cost los by the buyers go unnoticed in this financial juggler of the developers.

Buyers are asked to sign the contracts when the builders have already received 10-20 per cent of the price of the apartment. The agreement typically says that the “booking is provisional and in case of cancellation, the builder will retain the earnest money i.e. 10 per cent of the basic price and refund the balance with nominal interest.”

By that time, builders artificially hike the apartment price by 5-10 per cent in connivance with brokers to jack up the notional loss to the buyers who (not satisfied with the terms of the agreement) may think of cancelling the booking. Obviously, no buyers dare to question for fear of losing the earnest money and capital gain. These horrifying stories are just the tip of the iceberg. The ground reality of real estate sector in India, from a consumer perspective is harsh. And that is a gross understatement.

When one of our readers, Rakesh Dhall wrote in to us complaining that his builder is asking for a ridiculous price for parking space even after having a deal of super built up area or saleable area, we decided to dig into the issue. What our research revealed that this illegal practice has been struck down by the Supreme Court in a 2010 verdict where it was clearly held that any open spaces usable as parking cannot be sold separately as they are common areas. Ironically, despite the verdict, as Dhall’s experience clearly shows, this practice has not subsided at all, with harrowed consumers across the country forced to pay exorbitantly for what is rightfully theirs.

One of the most commonly reported issues, with innumerable consumer forum verdicts against it—delay in handing over the possession of the houses continues to be the proverbial thorn in real estate consumers’ lives. The wait for the consumer can sometimes be as long as 7-10 years. It is illegal and the consumer forums across country have been relentlessly taking a stance against such delays, the most recent one being a verdict by a Mumbai consumer forum where it penalised builder for delay in handover of flats. But the vicious cycle refuses to break, being repeated by some other builder, in some other place.

A Track2Realty Survey earlier says that eight out of every ten home buyers in India are sulking. And no big guessing game here to understand the wide chasm between the promised and the delivered. Consumers across the country are cribbing about the layout and designs being different from what was promised or shown in the catalogue. What is worst is when this habit of denying the promised extends to denial of basic amenities, leaving a bunch of frustrated consumers in its wake- with houses that leak, doors that creak and windows that rattle.

One of the Mumbai-based developers with financial services in its portfolio launched an affordable housing project in Lower Parel, Mumbai during the downturn of 2008. The buyers were promised finance b the same group through its financial services. But with market picking up by the end of 2011, the developer simply sent a notice to all the buyers to deposit the remaining payment within a period of one week or else their booking would be cancelled.

With the financial division of the company refusing to finance, the developer unanimously got the refund deposited in the accounts of the buyers, since the intention now was to scrap he affordable project for a high end apartment. There are even complaints when a consumer whose builder obliged and refunded the entire amount with interest in the wake of project getting delayed. However, the refund was in the form of a cheque that eventually bounced.

Denying electricity and water supply is a fairly regular practice for the builders. The consumers are forced to pull strings, pay money and resort to all sorts of tactics to ensure they get two basic facilities. The developers mostly get away with it and there are only few cases like the Thane Consumer Forum ha sentenced a builder to two years of imprisonment along with fine for denying a building water and electricity supply.

Is not it a case of a sector where justice is not just delayed but denied? Well, Track2Realty thinks so.