Real estate sector which has been in limbo since past couple of years is slowly buzzing with consumer action, courts and the government alike to deal with the delays and possession of the housing projects. The steps are expected to help bring cheers to homebuyers.
The real estate sector witnessed the worst phase in 2015-16 on the back of high inventory levels, diminished demand and limited liquidity, which affected the sales and prices.
According to a recent JLL report, new residential project launches reduced by 6 per cent in Jan-March 2016 period over Oct-Dec 2015. For FY 2015-16, the number of new launches stood at 1,81,294 units compared to 2,16,082 units in FY 2014-15, equalling a drop of 16 per cent.
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In the recent past, there have been many steps and rulings that have brought in some hope for homebuyers and the shift has moved from developer-centric to consumer-centric. We take a look at 5 such moves that empower homebuyers and may help in reviving the sector.
1. Delhi High Court in its June 3 judgement has ruled that no service tax can be levied in respect of the agreements entered into between buyers and builders for flats in an under-construction building in a housing project. The court further added that service tax could be levied on amount charged by the builders for preferential location of the flat. The order came on petitions filed by several persons who had entered into separate agreements with Sethi Buildwell Pvt Ltd to buy flats in a multi-storeyed group housing project developed by the builder in sector 76 in Noida in Uttar Pradesh. The court also said the government shall examine whether the builder in this case has collected any service tax from the petitioners and if such amount has been deposited with it, the money shall be refunded to them with 6 per cent interest.
2. In a landmark judgement last month, National Consumer Disputes Redressal Commission (NCDRC) directed Jaypee Group to give the possession of the homes to Kalypso Court buyers within three months (by July 21), or pay Rs 5,000 per flat per day if projects are not delivered in 90 days. Jaypee Group has also been asked by NCRDC to pay penalty of 12 per cent per annum for delaying possession of home to buyers.
3. Social media is increasingly becoming a strong and a wider platform to voice collective interest of aggrieved home buyers. This is now well supported by an encouraging regulatory edifice being built for the growth of the sector addressing the woes of both developers and buyers. In the recent past, Amrapali faced a flak of people after residents of housing society ‘Sapphire’ in Noida started social media campaign against the builder in April, forcing cricketer M S Dhoni to resign as the brand ambassador. Taking cue from residents of Amrapali Sapphire project, buyers of other housing projects, being built by Gaursons, Supertech, Unitech and Today Homes & Infrastructure among others, have launched protests as well as on social media platforms.
4. In one of the most significant moves to bring in transparency in the real estate sector and revive it, the Real Estate Bill was passed and made into a law this year. Real Estate (Regulation & Development) Act came into force from May 1 and its Implementation is under way. The regulation aims at restoring confidence among the end users in the sector through several initiatives. Among many other provisions, the distressed party has a right to demand the amount paid with interest (at prescribed rates) in case of failure to give possession. In case of non-withdrawal, the buyer shall be paid interest for every month of delay. It also provides for the establishment of speedy dispute resolution mechanism and the option of approaching the Consumer Courts at the district level for redressal of grievances.
5. In May this year, Urban Development Minister M. Venkaiah Naidu said that to bring in transparency in the housing sector and make it corruption free, approval for housing applications in Delhi will be made online. Once successful in the capital, the new mechanism would be put in force in other cities as well, he said, while warning real estate developers not to cheat the consumers, Naidu had said. He also warned that the builders will face strict action if they fail to meet time schedule given for completion of the housing projects.