Above: About 70 percent of unfinished projects in UP are located in Noida, Greater Noida and Ghaziabad/Photo: Anil Shakya
As builders abandon projects, the Real Estate Regulatory Authority Uttar Pradesh asks homebuyers to take matters into their own hands and complete the construction of their houses themselves
~By Ramesh Menon
Thousands of distraught and helpless homebuyers who invested their life savings or took bank loans for a dream house in NCR have discovered that they have been cheated. Taking note of this, the Greater Noida bench of Real Estate Regulatory Authority Uttar Pradesh (UP RERA) has now called upon around 770 homebuyers of Shubhkamna TecHomes to design and submit a probable financial plan to complete the housing project in Sector 137.
Some of the houses are half-complete, while others are 80 percent complete. None of the 13 towers has been completed fully. Pankaj Bansal of the TecHomes Flat Owners Welfare Association said that the homebuyers are actively looking at possibilities of pooling money to complete the construction and move in.
If the idea fructifies, many other homebuyers in a similar predicament all over India may also want to adopt such a method as scores of builders have abandoned their projects after collecting the money. It is bound to have an impact on thousands of projects stuck mid-way. Actually, homebuyers have no choice other than taking proactive action to complete their houses.
After Shubhkamna TecHomes Buyers Association submitted a plea that they would like to take charge of the abandoned project, UP RERA asked it to get clearance for the construction from at least 60 percent of the homebuyers. The financial plan would be forwarded by RERA to Currie and Brown, the financial consultants of Noida Authority. Once they clear it, the homebuyers can start construction. The proposal has given a ray of hope to many distressed people.
Balwinder Kumar, member, UP RERA, told India Legal: “These flats are on prime land in Noida where the land prices are spiralling. So, it will only be in the interest of the homebuyers to finish construction and take over their homes. The only hurdle is that Noida Authority will have to be paid dues of nearly `80 crore that the builder owes it before the reconstruction starts. We will have to see how that can be worked out.”
The Shubhkamna flats, sold in 2011, were scheduled to be handed over in 2014. But the builders defaulted by stopping construction. Preliminary investigations by the police indicated that they had diverted the money to other projects. The homebuyers said that they got no response from the builder or the Noida administration. R Ali says she paid Rs 15 lakh as initial payment to the builder, hoping for a house in three years. But the construction stopped midway. Now she is saddled with not only her monthly loan instalments but the rent of the house she is staying in.
Rahul Singh, a businessman, had booked a three-bedroom flat for Rs 50 lakh in a project called Shubhkamna City in Greater Noida. He paid an advance of Rs 8 lakh in cash after the builder and a bank official from ICICI Bank convinced him to take a loan for the remaining amount. He was told by the bank manager that once the loan was sanctioned, the monthly EMI of Rs 26,000 would be paid by the builder till the flat was handed over to him.
It seemed like a good deal. Singh told himself that the builder would end up paying 36 instalments as the construction period was for three years. The bank official also took some cheques from him as surety once the loan was sanctioned. It seemed perfect as the builder started paying the instalments every month. Suddenly, he stopped. The bank sent recovery agents to his house. When Singh tried to meet the builder, his bouncers threatened him. Singh had to cough up the instalments himself. He was horrified when he saw that construction of his flat had ground to a halt. He then found that the entire loan amount had been transferred to the builder’s account. He went into a state of depression. All he wants now is to get back his hard-earned money.
Subash Chander, another homebuyer, said that most of the homebuyers were government servants who had invested all their earnings after retirement in these flats. Many had gone into financial and emotional stress, while many others were dead, he said.
Finally, last month, the Economic Offences Wing arrested Diwakar Sharma, the Noida-based builder who was the director of Shubhkamna Buildtech. He had taken 90 percent of the cost of the flat in advance from the buyers with the understanding that the remaining 10 would be paid when the flat was ready for possession. Many fell for the ruse, thinking they would have a flat in 36 months as the builder had promised that they would be handed over to them on February 2, 2001. However, construction soon halted.
Sharma was arrested after a complaint was filed by TecHomes Flat Buyers Welfare Association saying they were cheated in the deal and were not getting the flats they had paid for. The police found that after collecting crores, the builder had diverted the money to other projects. A source said that the builder had asked the homebuyers for payment of the remaining 10 percent, too, but no one was ready to comply with this as the water systems, firefighting apparatus and lifts were not in place.
Anuj Puri, chairman, Anarock Property Consultants Pvt Ltd, told India Legal: “In a market environment where RERA has not been fully deployed across states and is diluted in many states, many customers continue to rely on consumer courts. We have seen a lot of success of buyer bodies which make collective appeals for court intervention. RERA is a process which swims against the tide of longstanding practices; it faces a huge uphill task. Nevertheless, the legal climate is definitely turning in favour of the consumer.”
UP RERA has received 3,340 complaints about 722 projects in the state, with 70 percent of the projects being in Noida, Greater Noida and Ghaziabad. Most of the complaints are about delays and fraud by builders. Prop Equity, a real estate consultancy firm, estimates that more than 4.65 lakh units of housing projects across India have faulted on delivery timelines. In the National Capital Region comprising Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad, around 1.80 lakh units valued at Rs 1.22 lakh crore face an uncertain future. However, Anarock puts this figure at 2,00,000.
The situation in other cities does not inspire confidence either. The number of delayed units in Pune is 95,000; in Kolkata 13,000; in Chennai 10,000 and in Hyderabad 8,900, according to Anarock. Projects stuck in various stages of non-completion were estimated to be worth Rs 4,64,300 crore and involved 5,75,900 undelivered units.
To say that the real estate sector is in a serious crisis would be an understatement.