Those invested in a delayed project, suffer in several ways. If this is their first house and they have taken a loan, the buyers are saddled with both, rent and EMI simultaneously. If it is a second house intended to be leased out to offset a part of the EMI burden, that plan goes awry due to the delay. Also, they can’t avail of the tax deduction on interest paid on home loans, unless they have received possession of the house. If the possession is received more than three years after the end of the financial year in which the housing loan was taken, then an anuual interest deduction of Rs 30,000 is applicable instead of Rs 2 lakhs.
The first option for the buyer is to sell the apartment and exit. Rajiv Mehrotra, head of Sunshine Properties, a Noida-based real estate consultancy, explains that ,“If you purchased the apartment three or four years earlier, it is quite
possible that its price would have appreciated despite the recent slowdown. If you need housing urgently, one option is to sell the apartment and buy in a ready-to-move project.” However, exiting projects that have been excessively delayed may not be easy, since finding a buyer would be difficult as was witnessed with the early buyers in Noida Extension projects.
If you decide not to exit the project, then the only chance you have of taking on the developer, is through group action. Currently, there are a number of associations fighting cases against developers. Get in touch with all the other aggrieved buyers in the project, form an association and take action. For instance, buyers have requested the developer for a specific date of delivery; protested and held marches; used both, traditional media and social media to highlight the developers’ misdeeds in an effort to shame them into delivering, etc. In some cases, this has proved to be effective as the bigger and more reputed developers are especially averse to negative publicity.
The buyers can also seek legal recourse. All the aggrieved buyers in the project, could collectively file a case against the developer in a consumer court. However, this route has its flip side. The court case can drag on for a long time and the developer usually pleads that the delay was caused by circumstances beyond his control. He often gets away with the promise to pay the penalty. If the judgement goes against the developer, he could take the case to a higher court. As long as the litigation continues, he will not hand over possession of the apartment to any of the buyers involved in the case.
Some buyers’ groups have even approached the Competition Commission of India (CCI) and even got judgments against the builder. However, there is a catch here. The CCI usually only entertains cases where it can be proven that the builder has misused his dominant position. It does not entertain all cases.
One development that should provide relief to numerous aggrieved Indian buyers, is the Real Estate Regulatory Bill. “The regulator would have stringent powers of deterrence, which would include a stiff penalty and also the right to have a developer jailed, if he delays his project excessively,” informs Sanjay Sharma, MD, Qubrex Realty.
Till this bill, which has been pending for several years now, is implemented fully, buyers should be extra cautious and go with developers who have a track record of timely delivery. Alternately, they should invest in a ready-to-move project, even if it costs more.