The Modi government’s demonetization drive seems to have taken its toll on real estate too. First, sales were hit and now some developers have again started delaying their projects, citing the reason of demonetization and its huge impact on the sector.
According to developers, demonetization has hit the realty sector hard as it has historically seen a high incidence of cash transactions. Cash flows of developers have been affected. They are also facing the problem of labour shortage and delay in transportation of materials etc due to demonetization, which is impacting the progress of their projects and may also lead to some delay in giving the possession of flats to homebuyers.
Industry observes, however, say that this is only a temporary phase and there is not much to worry. “There is absolutely no doubt that daily petty cash expenses and labour wage payments have become slightly difficult to cater to, as there is a strong fresh currency shortage in the economy at present. However, developers across the country are planning to curb the time losses and delays that can result due to this. They are also pushing the contractors to promote their labour to use digital methods of accepting currency, so that money reaches to everyone on time and work could be completed on schedule,” says Rajesh Goyal, vice president, CREDAI-Western UP & MD of the RG Group.
Experts also say that developers who have a track record of giving delivery on time are least affected by demonetization. “Such developers use modern-day technologies and have got experienced labour employed at work, who are able to complete the project on schedule even if it gets delayed for some unknown reasons,” says Deepak Kapoor, president, CREDAI-Western UP & director of Gulshan Homz.
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Whatever be the case, the fact is homebuyers are getting affected as some builders have again started delaying their projects. So, what should the affected buyers do? What are the options left before them?
For such home buyers, the Real Estate (Regulation & Development) Act (RERA) is most likely to be a saviour as such cases will be governed under its provisions after it gets implemented. “The legislation may or may not apply currently, depending upon where a buyer lives. The five UTs have implemented it in its entirety whereas UP & Gujarat have implemented it for projects launched from the date the law got implemented in the respective states. If a buyer lives in a state that hasn’t implemented RERA yet, it will soon get implemented. In fact, RERA – to be implemented across India from April 2017 – will protect home buyers against delays in projects as also result in quick resolution of any disputes. Under RERA, buyers in a delayed project can either continue with compensation (given by the developer) or exit,” informs Santhosh Kumar, CEO-Operations & International Director, JLL India.
According to experts, homebuyers should also refer to the clauses relating to Force Majeure, Penalty & Compensation in the purchase agreement with the developer and seek necessary relief under the provisions. If not satisfied, one also has the option of approaching a consumer court for compensation.
However, if one wants to avoid such situations, then one should always try to look at the track records of developers and select his developer carefully.
“There is no denying the fact that some builders may take this situation to their advantage and delay their projects deliberately. Therefore, it is in the interest of buyers to invest in property carefully and go only with established builders with a track record of timely delivery,” advises Pawan Jasuja, director, Finlace Consulting.