What if builders throw up their hands on unfinished projects?

On Friday, one of India’s largest builders threw up its hands and told the Supreme Court that it did not have the money to give refunds to home buyers in some of its projects. It said that if it had the money it would have completed the project instead.

This is symptomatic, in a way, of the state of many builders in the country with projects to be finished, home buyers breathing down their neck, but no cash flow to restart stalled construction at these projects.

Yes there are bright spots with some builders standing out of the crowd, but there are just too many of them saddled with unfinished projects. Home buyers are worried, and so should the government.

The court, in the Unitech case, has asked for the list of home buyers who want a refund and those who want possession of their homes with interest of course. Let us see how the court finally resolves the issue, especially when the builder has said upfront that it does not have money to pay refunds.

Such situations shouldn't arise but these are tough times when many builders have their backs against the wall.

But every case like this shouldn’t have to be decided by the courts.

That brings me to the point that a group of home buyers have been raising on the draft rules of the new real estate regulatory act. They point out that the rules are unclear so far on how existing projects, many of which are massively delayed, will be treated when they register with the to-be-setup regulator.

If the rules finally do not take into account the fact that in many ongoing projects builders have collected more than 80-90% of the money from buyers and yet those projects are stuck, and the need is to ask builders to keep aside whatever amount of money is required to finish the project (not just what the buyers owe to the builder), it will not serve the purpose.

With just 5-10% of money to be received from buyers, who will finish these projects then? Will the home buyers be asked to pitch in more? Will that be fair? If the builder throws up his hand, like Unitech has, what happens to the project and its buyers?

RERA can be helpful in bringing sanity to this industry and help it mature, but only if some of these questions are answered.

Credit : http://realty.economictimes.indiatimes.com/

Builders gyp MHADA of 5,000 flats in island city

Based on the revelation, the activist who posed the RTI query pegs the loss at Rs 14,000 crore

Maharashtra Housing and Area Development Authority (MHADA) has not received around 5,000 flats from private builders since 2006, reveals a reply to a query raised under Right to Information (RTI) Act.

To an RTI application by social activist Kamlakar Shenoy, the housing authority has admitted that in 266 cases it is yet to receive flats with a cumulative area of 1.05 lakh sq m in the island city. Shenoy estimates the claims value of these flats to be nearly Rs14,000 crore.

The issue pertains to redevelopment of the cessed buildings in the island city. The cessed buildings are mostly those buildings which were built in the first half of the last century and whose rents are protected under Rent Control Act. As rents were frozen, owners lost interest in maintaining these buildings.Subsequently, these buildings were handed over to MHADA for repairs and maintenance, and in return, MHADA collects cess on rent from tenants of these buildings.

There were 22,000 such buildings in the island city (between Colaba and Nariman Point in the south and Mahim and Sion in the north of Mumbai); of these, around 2,000 were redeveloped by MHADA and 4,000 by private developers.

The private builders get extra FSI for redeveloping these buildings and have to share the excess FSI awarded to them with MHADA and hand over a pre-decided percentage of constructed flats to MHADA free of cost. In 29 cases, FIRs were registered by MHADA in various police stations against builders for selling these flats without handing them over to it. However, in none of the cases has MHADA initiated civil proceedings to take these flats back from builders, Shenoy pointed out.

Considering the rate of real estate in island city is between Rs 40,000 and Rs 50,000 per sq ft, the total amount locked in these flats is around Rs 14,000 crore.

Housing rights activist and convenor of Ghar Bachao Andolan, Simpreet Singh, said, “Considering this government has given the slogan `Housing For All by 2022', it is its duty to recover flats which are due to MHADA and allot them to economically weaker sections of the society.“

In response to text message, MHADA CEO Sambhaji Zende said that he was out of station and will be available for comment only on Thursday.

Credit : http://epaperbeta.timesofindia.com/

High-rise forced to admit member after cops show up

Grand Paradi at Kemps Corner had illegally demanded a massive transfer fee from a flat buyer

A Kemps Corner high-rise that had demanded a massive transfer fee from an apart ment buyer in violation of norms was compelled to accept him as a member after authorities showed up and entered his name in the society register.

Businessman R Shah had purchased a flat in Grand Paradi two years ago, but the society refused to register him as a member unless he paid a transfer fee of Rs 33.5 lakh.According to the law, a housing society cannot demand more than Rs 25,000.

The flat needed urgent renovation, but Shah could not order any work without the membership. After a series of letters failed to resolve the dispute, Shah approached the deputy registrar of societies, which ruled that the demand for Rs 33.5 lakh was illegal and asked Grand Paradi's managing committee to collect only Rs 25,000.

The order was issued in March this year. The society appeal against it, but officials again ruled in Shah's favour and asked the managing committee to register him as a member.

Committee members apparently continued to drag their feet on the issue, forcing the Shah family to again seek authorities' help.

On June 27, the officer of deputy registrar asked the authorised official on the case, Anil Jadhav, to ensure the registration formalities were completed. Jadhav visited the society twice, but each time he was turned away.Finally, the deputy registrar wrote to the tehsildar's office.

Last week, the tehsildar and the city's executive magistrate ordered the Malabar Hill police to visit Grand Paradi and enter Shah's name in the register. A share certificate was also issued. “I hope this serves as a wake-up call that such intolerance and highhandedness will not be taken lying down,“ Shah wrote in a letter to the society.

Despite several attempts by Mirror, society chairman Jyotsna Tanna didn't respond to calls and messages.

Credit : http://epaperbeta.timesofindia.com/

Court edge for G L Raheja's son in clash for his Rs 11,000 crore estate

The siblings are clashing in court over a Rs 11,000 crore estate left behind by their late father upon his demise in March 2014.

MUMBAI: In a setback to Sonali Arora in her legal battle against Sandeep Raheja, both children of late construction czar G L Raheja, the Bombay high court recently pushed the dispute back one step in her brother's favour.


The siblings are clashing in court over a Rs 11,000 crore estate left behind by their late father upon his demise in March 2014. An appeal bench of Justices Abhay Oka and P D Naik set aside an order passed 10 months ago by a single judge and directed that preliminary objections to her suit be heard and decided first.


Her plea is for administration of a majority of their late father's estate. In other words, it is for distribution of the estate to the legal heirs. Her brother's case is that control of the entire group vests with him as his father had added Sandeep's as the second name (after his own) to shares of each of the four holding companies of his empire.


The order disposed of Sandeep's appeal against an order passed by Justice Gautam Patel last October. Justice Patel had dropped the preliminary issues over maintainability of Sonali's suit framed last February. The issues were whether her claim to administer the estate was legally delayed or barred by other legal provisions.


G L Raheja died two years after he moved the high court against his only son, in a battle over control of the group's estate. He had accused his son of "usurping'' control contrary to a family agreement under which he remained in overall control of the group companies. Sandeep denied such allegations and has contested the claim by raising a preliminary challenge to it even being heard. His challenge is pending in court.


In the meantime, following her father's death, Sonali moved the high court and was allowed to step into her father's shoes to continue the legal battle he started. Last year, though, she also filed a separate suit against Sandeep, seeking rights for administration of properties owned and held by her father, excluding those held in trust by her brother.


Justice Patel observed that there was no question of the claim being barred by delay or issues of ownership because all that Sonali claimed was administration of the estate. "She has not laid claim to any particular asset as being held benami," the judge said and held that the preliminary issues cannot survive and set out to hear both sides on merits of the case.


Aggrieved, Sandeep appealed against that order as it meant his sister was entitled to an order on her plea. His contention is that her plea is barred by law and ought not to be heard. The bench, without going into merits of his contention, though, held that once preliminary issues of jurisdiction were framed by the judge, it was not open for him to say these did not arise. Sandeep's lawyers also argued that in any case, the suit filed by G L Raheja ought to be heard and decided first, as it also involves questions arising over ownership of the shares and other assets. Sonali's lawyers said she has every right to file a parallel and independent claim which can be heard even now, for the estate exclusively held by her father. The bench, in its order on August 5, citing precedents laid down by Supreme Court, said once an objection to jurisdiction of court is raised at the interim stage, the court has no choice but to frame the preliminary issue and decide it after a proper hearing. This means that it is back to the beginning for Sonali. The single judge will have to decide maintainability of her plea. She may decide to challenge the order in the Supreme Court.


Either way, the hearing on her claim stands deferred.

Credit : http://realty.economictimes.indiatimes.com/

The unofficial renaming of the suburbs- Developers touch new lows

Take away my good name & Take away my life- Anonymous

Though clichéd, I cannot resist quoting Shakespeare from Romeo & Juliet here “A rose by any other name would smell as sweet” due to the apt context. But apparently Mumbai builders seem to disagree with the Bard and have launched into a renaming spree while selling properties. Obviously they firmly believe that the so-called “lesser” known locations will benefit from them being herded along with their more “popular” cousins. Yeah! As if calling Dahisar as Upper Borivili will change the property value of a housing project overnight and give it the sheen and polish it was missing till now.

Zero effort “relocation”

Maybe the builder communities can pressurize the respective municipal corporations to change the geographical boundaries of their jurisdictions and probably coerce the local, jurisdiction-bound police stations too to stretch their precincts. Imagine how Borivili’s “poor cousins” Dahisar & Mira Road benefits immensely after this renaming is done with. The Sanjay Gandhi National Park, in all its splendour and glory, not to mention the wildlife, will suddenly come closer to Mira Road. I mean who wouldn’t want their address to read as XYZ Heights, opposite SNGP, Mira Road? That too without any of them gravitating an inch towards each other. 

If the readers are confused about moving to Upper Worli from plain old Lower Parel as the result of a single full page advertisement in the leading newspapers, without any legal agreement, you have the builder fraternity to thank, for this overnight miracle. They have researched extensively and found out that Wadala residents were extremely distraught about their location on the map and decided to move them a little bit to the south of Mumbai. Not literally but at least on the first page full-page ad. And suddenly, New Cuffe Parade was born.

Developers-Taking buyer’s for granted

Every suburb in Mumbai, Thane & Navi Mumbai has its own share of history and I am sure its residents would be proud of it, without ever feeling the need to “borrow” some from its next-door neighbour. Today’s property buyer is an informed one and certainly has enough “vision” to see the signboards that proclaim the suburb’s name. But the property developers have a single aim while doing so-SELL PROPERTY and the present lot will “move mountains” in their quest.

Cases of blurring boundaries are on the rise by the day and developers are trying make hay by shifting locations, as seen in Upper Worli & Upper Borivili, and in certain cases, making them jump over long distances too, as seen with New Cuffe Parade. At this rate, I am sure Virar will soon become “Super Upper Borivili” and Kalyan/Dombivili will be known as “New Thane”. This senseless renaming has to stop and fortunately we buyers are legally fortified through the Consumer Protection Act, 1986 which takes a strong stand against misrepresentation of facts. If a section of property developers feel that their prospective buyers will buy their bluff, they sure need to reconsider their strategy, if not rename it!

Credit : Ramprasad Padhi

Founder & CEO - MumbaiProperties

President - Association of Real Estate Agents (AREA)

‘Maha housing board's policy to dilute rights of tenants meant to favour builders’

Former Congress MP Milind Deora, whose south Mumbai constituency contains a large chunk of the over 16,000 cessed properties, blamed the government for trying to undermine tenants’ rights yet again.

MUMBAI: The state housing authority's controversial proposal to dilute the rights of tenants during redevelopment of old cessed buildings in the island city has evoked strong reactions from various quarters.

Former Congress MP Milind Deora, whose south Mumbai constituency contains a large chunk of the over 16,000 cessed properties, blamed the government for trying to undermine tenants' rights yet again. "By reducing the tenant consent clause from 70% to 51%, Mhada is clearly batting for landlords and property redevelopers. This is the third such attempt in less than two years of the BJP-Shiv Sena government," he told TOI. "We will take to the streets in conjunction with all tenants' groups and ensure that this proposal does not see the light of day."

On Sunday, TOI reported that Mhada wants to curb tenants' rights during redevelopment by reducing the consent clause from 70% to 51%. If two or more buildings are proposed for redevelopment, then 51% consenting tenants of both properties will be sufficient, according to the proposal.

Tenants are currently protected under the Rent Control Act. Landlords have complained that rents have been frozen since the past many decades; tenants pay as little as Rs 100 to Rs 300 a month as rent while occupying large flats.

Mhada CEO Z Z Patil submitted the proposal to the municipal chief last month and urged him to incorporate the suggestions in the new development control rules.

Viren Shah, president, Federation of Retail Traders Welfare Association, said his members will approach chief minister Devendra Fadnavis to ensure tenants' rights and the 70% consent clause is protected. "This proposal is clearly meant to favour builders. We will call a tenants' meeting and chalk out protest plans."

NGO Janhit Manch too said the proposed amendment is "clearly at the behest of builders". "This will result in developers appropriating large tenanted premises and oust tenants using harassment tactics," said the NGO's vice-president, Utsal Karani.

Arun Zaveri, secretary, Federation of old Buildings Co-op Housing Societies & Tenants Associations, said Mhada and the state government seem happy to please builders at the cost of 30 lakh tenants. "It is a silly idea of Mhada to club slums with old cessed buildings for redevelopment. We shall be happy if the Mhada chief takes care of all Mhada buildings and colonies first."

Zaveri added that tenants are willing to co-operate for redevelopment if developer is "reputable, good and honest, but not when the entire scheme is loaded in favour of builders".

Sena MP from south Mumbai Arvind Sawant pointed out that the government said that old buildings be redeveloped by Mhada, instead of handing them over to private developers. "The state government must make a new law for redevelopment of old buildings," Sawant added.

Early this year, there were large-scale protests by tenants and political parties, including Shiv Sena and Congress, when the housing department tried to increase rents drastically for tenants living in large flats. According to that proposal, the state planned to target families occupying flats over 862 sq ft and commercial properties over 500 sq ft. However, Fadnavis was forced to withdraw it following stiff opposition from his own party.

Credit : http://realty.economictimes.indiatimes.com/

Commercial properties should do well: Anand Piramal

Piramal Realty, promoted by Ajay Piramal group, has launched five new real estate projects in Mumbai, the latest being a commercial project. Anand Piramal, executive director of Piramal group, discusses the company's strategy and plans with Raghavendra Kamath. Edited excerpts:


How have your launches fared given the slowdown in the real estate market?

Without any advertising, we sold around 250 apartments in our Vaikunt project in Thane in the first phase in just three months where we hope to sell only 75 units. In the second phase, we have sold 30 units. There has been a 25 per cent appreciation in prices since the launch of the project in September. We have seen a good uptake. You are right, there is a slowdown in the market and it will take two to three years if it has to come back in a big way. But, there is a good demand for projects of reputed brands. People feel with approval issues and cashflow problems, only good developers can execute and deliver their promises.

You were predominantly a residential developer. Why did you shift towards commercial properties?

We are pretty bullish that if India grows at 8-10 per cent, commercial properties should do well. We want to have a healthy mix. If residential would provide good cashflows, office properties will give positive yields and annuity like income. We are looking for land parcels in Mumbai for both commercial and residential projects. We are also open to joint ventures if our vision and values match with that of our partner’s.

Will you consider moving beyond Mumbai?

No. Ours is a Mumbai-only strategy. We will do projects that are within two hours from our office in Lower Parel. We believe geographic concentration will bring good results. Besides, it is a local business and understanding the complex approvals in one region is extremely important.

Piramal Realty outbid other players in the past to buy land parcels. Do you think you overpaid for some parcels?

No. Whatever we bought have given us good returns. In Mumbai, if you buy a good land parcel, there is value in it.

Do you think land values have become more rational now?

Now that distress in the system is pinching people, they’re offering good deals than they would otherwise have given. Land prices would have become a little bit rationalised.

What is the vision for your company?

In five to seven years, we want to be known as India’s most admired real estate company not in terms of scale and profitability but the role played by it in improving people’s lives and the country’s progress.

How will you achieve it?

One of our initiative is Piramal Assurance wherein we can buy back the property from the buyer at a five per cent discount to the market value between now and the possession of the project if he or she is not happy with the progress of the project or changed their mind for any reason. The value of the property will be done by two independent valuers.
 
Besides your existing projects, are you looking to launch more projects?

Yes, we will launch the Mulund project in the next couple of months. We’re evaluating two to three land parcels.

Credit : www.business-standard.com/