A group of around 330 flat buyers in DLF Westland Heights, Begur project are fighting a first-of-its-kind legal battle in the National Consumer Disputes Redressal Commission (NCDRC), suing the developer for delay in giving possession of flats and hiking prices among other issues. They are seeking Rs. 900 crore in damages. Having paid for the flats in 2009, many are yet to get possession, nearly four years after the promised turn-around time of three years.
The Real Estate (regulation and development) Bill, recently passed by Parliament and awaiting Presidential assent, will for the first time put in a system to address the concerns of such citizens. It is expected to bring in a correction in the realty market in the city and weed out fly-by-night developers. Even the big players will be forced to conform to norms by-and-large, industry observers say.
This is a big cheer for home buyers. The bill envisages a host of measures that foots the buyer on a level playing field with the developer.
The law will be implemented retrospectively.
R. Ramesh, a property consultant, told The Hindu that if the bill is implemented in spirit, more than 60 per cent of ongoing projects would be in a soup, forcing developers to pay up hefty compensation, which may bankrupt even reputed firms.
However, the biggest shift would be a ban on pre-launch offers, which is usually used to raise funds to commence construction. The real estate sector has been arguing that this point, along with the provision for an escrow account with 70 per cent of funds, will create a crunch in liquidity.
What’s in store for the realty industry?
Their strategy of launching a project and funding it with pre-launch bookings will no longer be legal
Maintaining an escrow account with 70 per cent funds will affect liquidity
In the long run, realtors will be forced to improve efficiency
Transactions to be standardised and professionalised
May open gates for FDI
What the Bill doesn’t address?
Mechanism to check building bylaw violations
Occupancy Certificate (OC)
Violation of FAR; will lead to cheating in Undivided Share (UDS) for the flat-owner
Most builders retain right to carry out additional development with change in FAR norms. This will also shrink UDS
Milestones linked to payment by buyers
While the total cost of the super structure is 40 per cent, developers collect almost 90 per cent for the same
Redevelopment after life cycle of project