To bare it all

The number of pending cases against such misleading property deals has skyrocketed of late,even though many of the duped customers that The Indian Express spoke to,have not approached any court of law. Ramesh Chopra,a non-resident Indian,is one of them. He booked his apartment in Omaxes The Forest Spa,situated in Sector 93B,Noida. The developer claimed that the project spread over an area of approx 8 acres,is strategically located in front of 325 acres of green forest. However,according to the Noida Authority,the area marked as green belt is fixed as so for a limited period and thereafter the use of the land can change. When contacted,Rohtas Goel,CMD of Omaxe said As per our understanding,if the government wants to deforest the land earmarked as city forest then the master plan has to be amended in consonance of that. The forest is as per the master plan of Noida.

Chopras apartment actually fell far short of the dream home promised in the advertisement. Unfortunately,his is not the only such case. In the absence of any regulation for misleading advertisements,buyers are routinely promised the moon and then delivered sub-standard houses.

Today when a home buyer goes to purchase an apartment in a real-estate developers project,he has very little concrete information. Based on the developers advertisement,he is able to visit the site,flip through a glossy brochure,and go around a sample flat which is adorned with expensive furniture to catch the buyers eye. Thats about it. With these insufficient inputs,he is expected to advance lakhs of rupees to the developer and depend on the latters word that the apartment will be handed over to him a few months later. In these conditions,most buyers would want more information: Whether he will get all that has been promised in the promotional advertisement? Whether there are any additional hidden costs involved? How much attention does the developer pay to quality? How good is his track record regarding timely delivery of projects? And so on.

According to PSN Rao,founder-chairman of National Association of Realtors NAR-India,A home buyer visualises most of the things that he is going to get. Whether his dreams are going to become a reality depends more on his luck and the developers goodwill than anything else. A flat with a forest attached,a house with the sky and stars above,and so on these are not merely catchy lines in advertisements; they are downright misleading. He adds that in the absence of any law on compulsory disclosure,advertisements tend to take customers for a ride. Real estate is perhaps the most expensive one-time purchase that a buyer is going to make in his lifetime. The outcome of that purchase cannot be left solely to chance.

BE WATCHFUL

In such a situation,home buyers need to be extra-cautious while making a new booking. They must make sure that the developer has the ability to deliver what he has promised,the project does not get delayed because of the developers financial difficulties,and there is no compromise on quality. There is great risk involved in buying in such projects. Buyers must read the fine print and take the plunge only after double-checking everything, says Rao.

Buyers should also do a small market survey of the area before finalising the deal for purchase which would give them a better idea of the prices along with the facilities provided by the developer. Sanjay Sharma,MD of Qubrex,a real-estate brokerage firm,says,While purchasing a property,buyers should also keep in mind the additional hidden costs involved in facilities like parking,maintenance,electricity,power back-up,membership of the club and pool,security,insurance,preferential location charges,super area versus carpet area etc. Such costs are usually not a part of the offer made by the developer and when added to the cost of the property,one may find oneself not benefiting from the scheme at all.

Experts suggest that even if one is willing to compromise on certain negatives,a reduction on the actual rate should be preferred to any structuring around the quoted rate. Buyers must read the terms and conditions of their agreements carefully. Unless they are completely clear and satisfied about all the clauses especially those related to the payment cycle,penalty on late possession,and penalty on the project getting changed or scrapped,they should not buy, says Sharma. He adds that technically prices in most of the markets in India have declined by 20-40 per cent. Now,these lowered rates are getting reflected in the primary market new launches.

To reiterate,attractive payment schemes and discounts are typically a bust-time phenomenon. If the market gets its pace,developers will quickly dispense with such schemes. If you wish to take advantage of them,act now. At the same time,do examine the offer carefully before making a decision.

RATING OF DEVELOPERS

Rating of developers and projects by a third-party rating agency can be a useful thing for a home buyer. It benefits all the concerned parties in the sector. According to Raman Uberoi,senior director,CRISIL,the countrys largest rating agency,Real estate being an unorganised sector,a third-party opinion can be beneficial to customers,financial institutions and even developers.

One,says Uberoi,a good rating mitigates the high construction and market-related risks that a customer takes when buying from a developer. Two,a rating service also creates an incentive for developers to maintain the standards regarding legal and construction practices. Three,a good rating also enables developers to sell the project to customers and raise funds from institutions. And finally,financial institutions such as banks and mutual funds that lend money to developers can consult these ratings in addition to doing their own due diligence.

Developers too agree on the merits of rating. A good rating definitely enhances the saleability of a project and attracts buyers. It should,in fact,be made compulsory for all projects. Such an evaluation will reward developers who adhere to quality and deliver on schedule, says Navin M Raheja,MD of Raheja Builders.

STANDARD NORMS IN PLACE

Clearly,there is a need to develop standard norms so that the developers cannot obfuscate in this matter. Says Rao: Any product must have a clearly defined method of measurement,so that the consumers are able to make informed decisions. For instance,in a department store,we are able to see the product,read its contents,know its weight or volume,price,and so on. Only then do we decide whether to buy it or not. In case we have doubts,we can actually have a check conducted. Even in real estate we need a statutory framework to ensure that all the specifications are clearly mentioned. And secondly,we need random checks at periodic intervals to make sure that the regulations are adhered to in practice. Unfortunately,all this is not done in the real estate sector at present.

Further,says Rao,legislation needs to be passed that provides for compulsory standard disclosure norms. The legislation should define these terms and should mandate their usage in a manner that is easily understood. This,he says,would go a long way towards protecting consumer interests.

Before purchasing a property,a buyer needs to be alert whether the developer has obtained all the approvals required for project development. In case any sanction is pending,he should try to find out the time required to obtain it. In case the time involved is too long,he should refrain from investing in such projects.

Two,buyers should also read the buyers agreement carefully and understand fully what they have been promised. In case a project is re-invented,the buyer should press for a refund.

In cases where genuine buyers are involved in a re-invented project,and they are unable to obtain a refund,legal recourse on the basis of the issued allotment letter is the only option, says Sharma.

With distressed buyers taking recourse to consumer forums,courts and online groups,the fight is getting messier. As the slow market forces cash-starved developers to halt,delay or re-invent projects,the level of dissatisfaction among buyers is likely to mount. All this once again underlines the need for a regulator for the real-estate sector ahead of the schedule. More importantly,such legislation will protect the common man and allow him to make informed choices while investing his hard-earned income.

praveen.singh expressindia.com