Friday, Oct 31, 2014

Housing Act at odds with SC order on parking spaces

SUPREMECOURTM The SC ruling disallows developers in Mumbai from extracting money from home buyers for open-to-sky as well as stilt parking.
Written by Shalini Nair | Mumbai | Posted: March 3, 2014 3:14 am | Updated: March 3, 2014 4:25 am

While Maharashtra might pride itself for being the only state to have introduced a bill for regulating the housing market, the Act
is set to effectively legitimise the rampant malpractice of builders charging home-buyers for parking spaces.

In contravention to the apex court ruling that disallows developers in Mumbai from extracting money from home buyers for open-to-sky as well as stilt parking, the Maharashtra Housing Act, 2012, explicitly states that the registered agreement for the house should mention the price of the parking space. The Act, which received Presidential assent last week, is set to be implemented in the state soon.

The 2010 SC order noted that parking spaces are part of the ‘free of Floor Space Index (FSI)’ areas of a project. Hence, the developer has no right to sell it separately to the homebuyer and must in fact transfer it entirely to the society as soon as the project is issued an occupation certificate.

Despite the ruling, in the eastern and western suburbs of Mumbai the charges for a 150 sq ft slot, taken entirely in cash, range anywhere between Rs 1.75 lakh to Rs 7 lakh for open parking and a maximum of Rs 10 lakh for stilt parking. The charges in the premium residential complexes in South Mumbai go as high as Rs 12 lakh for open parking and Rs 25 lakh for stilt parking, rates that equal the cost of a home in smaller cities.

The SC ruling was based on the Maharashtra Ownership Flats Act, 1963, (MOFA), the precursor to the new Act, that disallows developers from levying charges on areas that are not included in the FSI computation. However the Maharashtra Housing Act, which now replaces MOFA, categorically spells out that the price charged on parking lots “should be shown separately” in the agreement, a provision that in effect legalises the fraudulent practice. Until now, the 100 per cent cash component for parking allowed them to get away without mentioning the price charged for such lots in the registered agreement and thus the apex court ruling was followed on paper if not in practice.

Sachin Ahir, minister of state for Housing, said, “The MOFA didn’t lay down anything in particular on the issue of parking. Developers are anyway known to take money in black for parking spaces. At least with the new law making it mandatory to specify the amount of money taken for parking spaces in the agreement, it will be more transparent.”

Developers continue to charge for parking despite the fact that even under the new fungible FSI rules, parking is not included in the FSI calculations, developers are not charged a premium for parking and are in fact allowed to construct 25 per cent extra parking at no cost. The only cost incurred by developers is by way of minimal construction costs.

“Over and above the rates continued…

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