By Varun Singh

A developer was asked by MahaRERA to to refund the entire amount paid by the homebuyer for delay in handing over possession of the flat.

Homebuyer Violet Justin Arokiaswamy approached MAhaRERA against developer Unique Multicon India Pvt. Ltd seeking directions from MahaRERA to the developer to refund/repay the advance amount paid along with interest under the provisions of section 18 of the Real Estate (Regulation & Development) Act, 2016.

The project in concern here is “Palazzo Greens” situated at Pune, The homebuyer was also seeking compensation for breach of contract by the developer.

The homebuyer complained that she entered into a registered agreement to sale with the promoter on January 7, 2016, in respect of the said flat in the respondent’s project and paid booking amount of Rs 1 lakh. Thereafter she paid further an amount of Rs.9.54 lakh to the builder, for which the developer has duly issued the payment receipts.

According to the said agreement clause number 14 the builder was liable to handover possession of the said flat to her within a period of 36 months from the date of execution of agreement with grace period of 6 months, which ended on January 7, 2019, and still there is no substantial development of the said project and the promoter allegedly promised to deliver the possession of flat by January 7, 2019. Further there was no further extension of date by 6 months mutually agreed which would still end on July 7, 2019.

The homebuyer didn’t wish to continue in the project and claims refund of amount paid along with interest since the promoter has failed to handover timely possession of flat due to slow progress of the project and she seeks refund on the grounds of delay.

The homebuyer stated to MahaRERA that she has always been ready and willing to perform her part of contract but promoter has failed to fulfil its promise.

The homebuyer claims that the developer, has also failed to intimate the progress of project and demand the consideration i.e. slab-wise payment and therefore the complainant claims refund of the amount paid along with interest and compensation as per provisions of RERA.

MahaRERA also noted that, the developer, didn’t bother to file its reply to this complaint, though the complaint is visible to the developer in its project web-page.

During the course of hearing, the developer was specifically directed by MahaRERA, to upload its reply in digital form by evening of May 3, 2021. However, the developer again failed to comply with the directions. “It shows that the respondent is not willing to contest this complaint. Hence, the MahaRERA has no other alternative but to proceed with the matter ex-parte against the respondent on merits,” noted Dr Vijay Satbir Singh, Member- I, MahaRERA.

Further from the webpage information uploaded on MahaRERA website by the developer, it is seen that the respondent has registered two wings in this project viz wing A and B and it has obtained part completion certificate to wing A on 29-07-2020.

However no completion certificate has been obtained for the building in which the complainant’s flat is situated nor any form 4 is uploaded on MahaRERA website. It shows the project is still incomplete and prima facie the developer has violated the provision of section 18 of the RERA.

Singh in the order said, “In view of above facts (delay) and discussion, the respondent is directed to refund the entire amount paid by the complainant towards the consideration of the said flat along with interest at the rate of SBI’s Highest Marginal Cost Lending Rate (MCLR) plus 2% as prescribed under the provisions of section-18 of the Real Estate (Regulation and Development) Act, 2016 and the Rules made there under from the date of payment till the actual realisation of the said amount to the complainant.”

Also Read: Builder Takes MHADA To MahaRERA, Gets No Relief

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By Varun Singh

The lockdown because of COVID 19 pandemic forced most of us to lock ourselves. The entire nation had come to a halt.

Slowly things are starting, but the impact of the lockdown is expected to be felt for a very long time.

The COVID pandemic instilled a fear in the minds of people, and it impacted every thing.

Real estate industry been severely impacted by the pandemic. Migrant labourers the soul of the construction industry left for their natives.

Many of these labourers walked back to their home town, and as they walked far from cities, the deadlines for project completion got extended too.

This may sound alarmist, but is the truth that the real estate industry is looking at. 4.66 Lakh homes scheduled for 2020 delivery may miss deadline.

If not for COVID-19, the top 7 cities were to see the delivery of nearly 4.66 lakh units by 2020-end. Launched after 2013, many of the projects were in the final leg of completion. With almost zero construction activity in last few months due to the lockdown, the completion deadlines for almost all these projects has got extended.

Homebuyers will have to adjust to new realities, and that is delayed possession. Most state RERAs have already given a 6-month extension to developers on previously committed timelines.

Anuj Puri, Chairman – ANAROCK Property Consultants says, “As many as 4.66 lakh units were slated to be delivered in 2020 and another 4.12 lakh in 2021. Maximum completions (in both years) were to happen in NCR (approx. 2.40 lakh units). This region is set to witness more project delays over and above the backlog of over 2 lakh units already delayed in the region from before.”

Prior to COVID-19, the top 7 cities were to see completion of over 8.78 lakh units in 2020 and 2021 combined. Of this total expected supply, nearly 4.66 lakh units were to be added in 2020 and the remaining 4.12 lakh units in 2021. 

• NCR was to see maximum completions in both years – of about 2.40 lakh units. Of this, 1.01 lakh units were to come up in 2020 and another 1.39 lakh units in 2021. 
• MMR is second with nearly 2.10 lakh units expected to be delivered in two years – 1.07 lakh units in 2020 and nearly 1.03 lakh units in 2021.
• Bengaluru was expected to see delivery of nearly 1.51 lakh units in 2020 and 2021. This year the city was likely to see delivery of 1.01 lakh units while in the next year it was just half at nearly 50,000 units.
• Pune was to see completion of nearly 1.36 lakh units in both years – 69,000 in 2020 and 67,000 in 2021.
• Kolkata was next with nearly 59,000 units meant to be delivered in two years – 33,900 units in 2020 and nearly 25,100 units in 2021.
• Hyderabad was to see completion of more than 45,200 units in both years – 30,500 units in 2020 and another 14,700 units in 2021.
• Chennai had the least completions in both years – about 37,000 units. Of this, 24,650 units were to complete in 2020 while another 12,520 units in 2021.

“The Government must intervene to address multiple challenges including labour shortage in top cities. Even if developers have the financial strength, it will still take a while for most of them to resume construction because lakhs of labourers have left cities and migrated back to their villages. Moreover, many of the top cities are still grappling with the virus,” said Puri.

Also Read: TATA housing directed to refund money to homebuyer

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By Varun Singh

Your dream home may further be delayed, this is what the apex body of real estate CREDAI fears.

CREDAI has written to the central government seeking their intervention. The letter is addressed to Hardeep Singh Puri, central minister for Housing and Urban Affairs

The letter is a request for immediate intervention for controlling the steep hike in prices of cement and steel amidst COVID 19 crisis.

According to CREDAI, amidst this unfortunate situation, all industries are combatting the crisis and real estate industry is no different.

Real estate is the second largest employer in the country, and the industry desperately wants to start the construction activity across the country.

The letter states, “We would like to bring your attention to the cartelization by the cement and the steel manufacturers by imposing a sudden increase in their selling price.”

CREDAI states that across various states, there has been an increase of Rs 100-250 per bag of cement. Steel prices they allege has increased by Rs 2,000-2,500 per metric tonne.

They say this will ultimately lead to home buyers being effected as the construction prices will go up.

“Given the current crisis faced by real estate industry because of COVID 19 or even otherwise, such an abrupt increase will be a bolt on the blue for the developers and will lead to increase in construction cost and overall project cost, hurting homebuyers.” CREDAI said.

Developers claim that with wafer thin margins many developers may be constrained to stop construction work, thereby impacting delivery of the projects. Thus leading to penalties under RERA, and other authorities and so on. “Needless to say, this will have a cascading effect on the home buyers also,” reads the letter.

The builders body also feels that the increase in prices of cement and steel is abrupt and highly unethical. They also claim it amounts to unfair and restrictive trade practices.

They have urged the government to control the price rise and requested the minister to take the matter with the concerned relevant ministries.

Also Read: Shahid Balwa In Uddhav Govt’s Crucial Committee.

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By Varun Singh

Covid-19 has forced the government to put the entire country under lockdown. This is expected to cause a lot of delay to the under construction projects.

A research by Anarock shows that close to 15.62 lakh under construction homes will be impacted.

The Covid-19 lockdown will even cost delay to home buyers. Prashant Thakur, Director & Head – Research, ANAROCK Property Consultants says, “Another fallout of the lockdown is that many key markets will have almost zero construction activity at the project sites.”

According to Thakur, this will further strain several developers’ financial health. As many as 15.62 lakh units across the top 7 cities were in various stages of construction as on 2019 end, reveals ANAROCK research. These include all under-construction units launched between 2013 till 2019-end. Even this figure is conservative – the number of units will be higher once Q1 2020 data comes in.

Further analysis reveals that out of these 15.62 lakh units under construction, nearly 57% or nearly 8.90 lakh units are in MMR and NCR alone. Both these regions already have a backlog of lakhs of delayed/stalled units. With construction activity almost coming to a standstill, homebuyers will have to brace themselves for another wave of delayed project deliveries.

Under-construction Stock – City-wise

• MMR currently has the highest under-construction stock with nearly 4.65 lakh units – 30% of the overall under-construction stock across the top 7 cities.
• NCR is close behind with 27% or over 4.25 lakh units in various stages of construction. All these units were launched between 2013 till 2019-end.
• Pune has close to 2.62 lakh units in various stages of construction.
• Among the three southern cities, Bangalore has the maximum under-construction stock as on 2019-end with nearly 2.02 lakh units, followed by Hyderabad with nearly 64,250 units and Chennai with the least stock of nearly 54,200 units.
• Kolkata currently has more than 90,650 units under construction.

The Road to Recovery

Once the COVID-19 crisis is under control, the Government will have to dole out various economic measures to bail out severely-hit sectors, reconsider its fiscal deficit targets and start spending. That said, since this is a crisis with Pan-India ramifications, all impacted projects will have to be excused from construction delay penalties under the respective state RERA.

Also Read: Gudi Padwa new launches on hold due to corona

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By Varun Singh

Builders at most of the construction site have stopped work because of coronavirus. The lockdown has forced a literal stop work too.

“To support the government decision we have kept all our construction and sales sites closed along with our city and regional offices advising all Omkarites to stay at home,” said Devang Varma, Promoter, Omkar Realtors & Developers said.

Varma is not alone many developers have decided to close the construction sites.

According to data from MahaRERA website, of the total 25,356 real estate projects seeking registration with MahaRERA, 25,060 projects were registered and 5,280 projects are completed. The projects that aren’t completed are ongoing and are in different phases of construction.

Anand Gupta, spokesperson, Builders Association of India says, “The lockdown has had a serious impact. Projects are going to be delayed. We are hopeful that this delay will be considered as part of Force Majeure, (where people are unable to fulfill a contract because of unforeseen circumstances) and we aren’t penalized by MahaRERA.”

Many developers have even delayed their new launches during Gudi padwa. “We have postponed our Gudi Padwa launch and all our campaigns too. All our site offices will also remain closed. We will have to together support our Government in this time of distress,” said Subodh Runwal, Director, Runwal Group.

Some builders have even gone for digital launches of new projects. They still do not want to miss the festive season.

“Considering the festive mood for Gudi Padwa, we were going to launch a new project at Andheri East. Earlier there was to be a physical launch with channel partners and brokers but now due to the Covid-19 situation, we will be conducting a digital launch where we will accept requests from customers online. To avoid crowd gathering, we will give time slots to the customers once the impact of this virus settles down,” said Anuj Khetan, Director, Vijay Khetan Group.

A normal mathematics according to Gupta, says that if a construction site see no work for a month then the project will be delayed by one and half months time. This includes calling back the construction workers and getting construction materials.

Also Read: Gudi Padwa new launches on hold due to corona

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By Varun Singh

Litigations are delaying the real estate projects of Mumbai. A paper by Brookings Institution India Center, shows that of the 3,000 ongoing formal real estate projects in Mumbai 30% of the projects and around 50% of the built-up space is under litigation.

The paper worked upon by Sahil Gandhi, Vaidehi Tandel, Alexander Tabarrok and Shamika Ravi elaborates the fact that litigations do hamper the speed of the projects.

The paper says “On an average, construction takes around 8.5 years to complete. This paper investigates the causal relationship between litigation and completion time of real estate projects in Mumbai. Even after controlling for experience of the developers and project size, we find that litigated projects take 20% longer to complete. We address potential endogeneity concerns using an instrument — the neighbourhood’s propensity to sue, and find that litigation increases time taken for completion a project by 58%. This has direct implication for housing affordability; house prices in Mumbai can go up by one-third due to litigation.”

The paper has used data from three sources: The Real Estate Regulatory Authority of Maharashtra (MahaRERA), the MCGM, and the Bombay High Court.

The paper explains that the logic for litigation as follows. First, it may be the case that residents in certain neighbourhoods are more organised or there is a strong presence of NGOs who will litigate on behalf of residents to oppose malpractices by developers or petition the government.

Second, specific location characteristics could increase likelihood of litigation. For instance, development in areas close to forests, mangroves or the coastline could see higher chances of litigation.

Third, if frequent subdivision of land in certain neighbourhoods result in fragmented ownership, and those possessing land have unclear property titles, the possibility for disputes over land ownership in these areas will increase.

In Maharashtra, of the ongoing projects registered with RERA, 16% are under litigation. The litigated projects comprise 31.2% of the total built-up area of RERA registered projects and 19.1% of the total land area of RERA registered projects in the state.

A project can have one or more cases in the court. In all, the total number of cases for projects in Mumbai is 2,836 in different courts.

A majority of cases (57%) are in lower courts and tribunals, followed by the High Court. The average pendency of cases in the Bombay High Court in 2016 was around 3.5 years. Only 1% of all cases are or have been heard in the Supreme Court.

The mean duration for completing real estate projects is 8.44 years. The average built-up area of projects is 8842 square meters. In 27% of projects, the developers have past experience, 33% of projects are redevelopment projects, and 18% of projects are being built under the Slum Rehabilitation Scheme or are slums converted to formal residential buildings.

The paper also focuses on solutions. The paper reads, “Policy solutions must focus on tackling the two-pronged problem of high incidence of litigation and high pendancy rates in the judiciary. The former require reforms pertaining to land titling and reducing complexity in regulations. The latter require to be addressed through measures that improve the efficacy of an overburdened court system.”

Also Read: In 2019: 52% Buildings Launched Were High Rises.

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