Will the anguished home buyer return to under-construction properties?

By Nibodh Shetty, Consultant – Research, Knight Frank India

The government has been trying hard to bring back buyer confidence for committing to under-construction properties by asking states to implement RERA, which would safeguard the buyer’s interests. Maharashtra has been the first state in India to have implemented RERA by notifying the Act, setting up a permanent authority and putting in place a functional portal which has been attending to grievances from all stakeholders.


Most of the complaints were pertaining to delay in possession of the flat and the buyers had issues with the revised deadline for the project mentioned on the RERA website. Few cases were pertaining to incorrect/incomplete information of the project on the RERA website and one case was pertaining to parking. Out of the 60 complaints, only 1 complaint till date was filed by a developer, rest all were filed by buyers.

For complaints filed by buyers

There were complaints filed for a variety of issues, right from the revised deadline mentioned on the website to ambiguity in regulatory approvals to slow pace of construction. Some of the unique complaints and rulings have given by the authority were as follows:

Most of the 60 complaints filed by buyers were with respect to the revised deadline mentioned on the RERA website, which was different than what was mentioned in the agreement and the buyers sought compensation for the delay or refund of booking amount. In those cases, the authority brought about a compromise between the buyers and developers by asking the developers to pre-pone their date of completion much before the one they have declared on the website, failing which, they would have to pay interest to the buyers till possession is handed over. The authority also directed developers to refund the money paid by the buyer, with interest in several cases where compromise was not possible.

A consortium of buyers in a project had issues regarding delay in possession due to the slow pace of construction only of that particular wing, the authority noted that the developer would not be able to complete that particular wing in the complex on time, hence it directed the developer to accommodate the buyers into the other 2 wings in the same compound, which were progressing at a much better pace and asked the developer not to charge any floor rise if the movement is within 4 floors of the originally allotted floor.

The buyers informed the authority that the developer had not updated the complete information with respect to the number of flats in the project that were pledged to an NBFC and the developer was not forming the society despite selling more than 51% of the total number of flats in the society. The developer was instructed to declare the complete information of the project and also form the society.

The buyer stated that they had got information from other sources that there are issues in regulatory approvals received for that project and hence, the buyer applied for cancellation of the booking in December 2016; but the developer informed the buyer that they are waiting for clarity on issues on those approvals from regulators and since the booking amount paid was less than 20%, they would have to forfeit it as per the terms and conditions agreed upon. The authority went through the approvals and found that when the buyer had applied for cancellation of booking, there were issues regarding the clarity on regulatory approvals; hence, the developer cannot cite terms and conditions that were signed during booking and must refund the buyer’s money.

Summary of the rulings

Judgment in the favour of Count Percentage
Consumer 47 79%
Developer 11 18%
Neutral 2 3%
Total 60

Impact of rulings

The Maharashtra government has been moving in a right direction by bringing in an effective regulator who has started delivering on its intent. The regulator has been bringing about an unprecedented change in the attitude of real estate developers towards consumers and for the first time, developers are being made accountable for delivering what has been promised. Currently, buyers prefer to purchase ready-to-move properties despite having to pay a hefty premium compared to under-construction properties. We believe that such rulings by the RERA authority where consumers are getting some amount of reprieve and assurance of regulatory oversight in case of wrongdoing by developers would go a long way in improving buyer sentiments. In the medium to long-term, it can bring back the confidence of buyers for investing in an under-construction property.

*Methodology- To understand the power-sharing between the developers and house buyers, we have analysed each of the 60 rulings given by the Maharashtra-RERA individually till 6 Dec 2017. The overall number of complaints cleared by MahaRERA was greater than 130; however, given the purpose, we have not considered the cases where the complainants have settled the matter amicably or withdrawn their complaints due to other reasons and complaints filed by co-promoters.


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