Governments have changed, interest rates have dropped, the economy is gaining momentum and everything from free gold to luxury cars have been offered. But since the last three years, nothing seems enough to convince people in India to come buy a home. We at the NDTV Property Show have been repeating time and again that home buyers in India deserve fair-play from their builder if the sector is to revive. There is nothing in the marketing vocabulary today that is going to sell a project faster than a basic assurance of fairness and transparency. Now from the looks of it, the first trickle of change may have begun.
Delhi-based Puri Constructions is initiating a NCR wide campaign, pledging to home buyers a set of seven rights. They are using the proposed Real Estate Regulation Bill as a template to offer equal terms to home buyers as part of their ‘We Pledge’ campaign. They are offering:
1. Right to a full refund within 30 days of booking.
2. Right to equal penalty for delay in completion
3. Right to no change in area bought.
4. Right to no construction escalation charges.
5. Right to see all approvals in place.
6. Right to a separate escrow account mechanism.
7. Right to a free first transfer.
The company admits that their campaign is a result of what they have been hearing from their buyers and potential customers. They decided to stop sulking and blaming market conditions for poor sales and got down to accepting the hard truth. Managing Director of Puri Constructions, Arjun Puri is perhaps the lone voice in the industry today when he says – “I felt that the customer today has lost some of their confidence in us as an industry. There are simple changes we need to make in our business practices that will bring that confidence back. If we want market conditions to change, then we have to look within as well. We can’t just hope for there to be a magic wand waived by the Government or the economy out there. We have to do something ourselves as well to make this change.”
Sounds reassuring, but are we ready to trust a builder’s word just yet? What is the legal validity of such promises? Can a buyer hold the developer accountable if such assurances turn out to be just a gimmick? Yogesh Singh, Partner at Trilegal says that “whatever is written in the brochures definitely has a legal sanctity to it. And buyers must get signed copies of brochures to use as evidence in court to prove that they relied on the claims of the builder. Buyer must also insist that such terms be included in the Builder-Buyer Agreement.”
A deal that empowers the buyer with equal terms and conditions as those enjoyed by the builder may just strike a chord with property-seekers, especially in NCR where housing projects are delayed by as long as 40 to 60 months. Despite liberal payment plans and discounted deals in the resale market, people get cold feet when they hear ‘property’. Because why get your money locked in an asset that’s not growing and is likely to never get delivered? And to top that, there is no authority or court in India that has been successful in getting a stalled project restarted or in forcing a bankrupt builder into selling his assets to compensate his allottees.
There are hundreds of cases being fought by home buyers in the Consumer and Civil courts against the likes of Unitech, Parsvnath, BPTP, Emaar MGF and Jaypee. Yet every time the court rules heavy compensation or a refund, the case just proceeds on to a new hearing. And the average home buyer then has nowhere to go, except camp outside the developer’s office or house, get shunted out by his bouncers and then be slapped with an allotment-cancellation letter for raking up the issue publicly. But what Puri has realised and others need to accept is that this relationship breakdown can only be bettered by developers themselves. Not by the Government. And not by banks. Get off the high horse and give the home buyer a fair deal. There is no other way to fix the confidence-crisis in the market. But will Puri’s self-regulation example be lapped up by other real estate companies? Will the sector be willing to adopt such equal terms to revive market sentiments?
President of Developers body CREDAI, Getambar Anand says that at least the sector has realised that they need to start looking for answers within their own firms. He agrees, “there has been mismanagement. It is unfortunate and bad luck that people made wrong decisions. So they ended up earning a bad reputation. Without having the intention to cheat people, why are you branded a cheat? So they want to rethink this and redo things the right way so that such things do not happen.”
But why is the real estate industry’s untouchable top-tier, the likes of Jaypee Group, Unitech, BPTP, Emaar MGF, Parsvnath not introspecting? In the last 3 years of the real estate slowdown, we are yet to hear from these behemoths about how they plan to kick-start their stalled projects or how they plan to compensate their thousands of allottees for the emotional and monetary distress they have caused? If they are unwilling to self-regulate, when and how will the buck stop with them?
Vasudha Sharma, Anchor & Correspondent, NDTV