Action against project delays may boost buyer sentiments
After the landmark ruling by National Consumer Disputes Redressal Commission (NCDRC) on a delayed project in Gurgaon, home buyers can expect an improved scenario in completion of real estate projects.
Dilip Vashisht booked an apartment in an under-construction project in Gurgaon in 2008, which promised him possession by the end of 2012. He, however, has not received possession till date. Such delay in real estate projects is not new; several renowned and city based developers across India have their properties held up for various reasons. This ultimately impact the home buyers adversely. In case of Vashist, his investment of Rs 25 lakh stands stuck for over seven years. There is no certainty about the possession date or whether he would get his money back along with penalty charges by the builder, if any.
Generally, the buyer-seller agreement carries a penalty clause stating the compensation that the builder will be liable to pay to the consumers in case of any breach in the contract – most often a delay in possession. The clause further pronounces the extension of the project by six months to one year under “special circumstances”, which are beyond the control of developer. These special circumstances include workers’ strike, unforeseeable weather conditions, delay on contractor’s end, delay in project approvals from government, etc.
Even if the developer agrees to pay a compensation, such rewards are usually low, not exceeding 5 per cent per annum of the base value of the residential property.
However, the tables seems to be turning now and buyers like Vashisht are expected to benefit from it! In a recent landmark decision, National Consumer Disputes Redressal Commission (NCDRC), ordered a renowned developer in Gurgaon to pay compensation at the rate of 12 per cent per annum to the consumers whose property’s possession stood delayed for a long time. This is subject to the promise that developer hand overs the possession between February 2016 and February 2018. If the project is delayed further, the compensation would increase to 18 per cent, stated NCDRC. Interestingly, in the buyer-seller agreement by the concerned developer, the compensation offered in case of project delay was only 1.8 per cent per annum.
The commission has further stated that any unfair rules, like the 1.8 per cent compensation in the current case, can be challenged in the court or consumer forums, even if both parties have signed an agreement.
Even the government seems to take the matter of project delays seriously. Amendments have been made to the recently introduced ‘The Real Estate (Regulation and Development) Bill, 2013,’ which now not only seeks to register the projects, but also attempts to stop the holdup in such properties. Under this act, there is a provision of establishment of a Real Estate Appellate Tribunal for offences and penalties related to real estate developers and home buyers. There is also a provision for establishment of fast track dispute resolution mechanism.
All efforts are being made to streamline the long neglected real estate sector of India. Government is trying all measures to boost the domestic and foreign investments in the segment and help the home buyers in the process. It is also trying to make the realty sector transparent and developers accountable. Hence, it seems that soon home buyers will not have to worry about any sort of delays in getting possession of their properties.