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Wednesday, December 17, 2014

Lies and Secrecy have become USPs of Real Estate industry

Since last many years there was a Builders Vs Buyers scenario in Indian Real Estate Industry and it seem that this scenario is going to remain there in future also . Because lies and secrecy have become unique selling Propositions (USP) of this industry .Government authorities also keep mum on buyers issues. Why don’t concerned authorities provide  necessary information to buyers ?, why builders don’t put real facts before them, why they hide vital information from buyers?



Since my last posts Pune - hub of illegal Real estate activities,More than 150 projects violated Environment clearance norms  and what is the future of the projects that have violated environment norms ? I received many phone calls and emails. All the calls and mails mostly were revolving around only environment clearance (EC) problems. For readers’ perusal reproducing four excerpts from those emails and my comments here.


Problem 1 - The Projects to whom State Level Expert Appraisal Committee (SEAC) has recommended  Government of Maharashtra to take action for violation of Environment (Protection) Act, 1986 .Can you guide me to find what were the issue in the case and if the case open against the builder or has been cleared or not

My comment– in my post  what is the future of the projects that have violated environment norms ? I have made it clear. And best option is to ask this question to the builder because after legal action and clearing objection taken by SEAC he may get EC. Hence it is their responsibility to disclose the information about what action has been taken on the builder, has the builder cleared all the objections and whether EC has been given to him or not.

Problem 2-  After going through your blog I asked builder about EC.He said that he has applied for EC  & will get the clearance within 115 days.He said that he is not going to start building construction till he get clearance. Now he is asking me to do agreement by demanding 20% amount of flat cost. In this case I am not sure to go for agreement with builder or not. What I should do in this case? Can you please help me in the given situation? I have draft copy of agreement sent by builder, can share it if you allow for it. Can I get your appointment for consultation?

My comment – Builders seems to be law abiding but then why he is asking money in advance. Because environment clearance (EC) should be there prior to starting construction? And what if he doesn’t get it? . Is there any clause mentioned in agreement regarding that aspect?. What will happen if he doesn’t get EC. ( he may be sure about it because of something else).To me it is crime to sell, make agreement or demand money before obtaining all the necessary permissions.

Email 3 -. As a RTI activitist you surely or might have the contact or  email id of  the group where we can Seek information whether any particular project go to clearance or not.I have already gone through the Maha site link but couldn't find my builder project so just want to re-assure whether my builder got environment certificate or not. Request to share the contact number or email id of the point of contact or SPOC who is responsible to provide environment certificate  for residential project going on Pune.

My comment – unfortunately there is no such forum where property buyers can get all the relevant and authentic information.

Unfortunately all these mails talk of only environment clearances and nothing else, as if that is the only thing about which builder has lied and everything else is right. I wonder how do people believe in the builder whose USP ( Unique selling point) is “ telling lies”. Environment clearance is one thing that has come to light but there are many more things that are to be taken care before buying flats.

But big question is why public authorities don’t put information related to real estate projects in public domain?. Reason is simple. Most of the bureaucrats and politicians directly or indirectly get benefits from such projects.

In last many years in India housing for poor or affordable housing has become a serious issue. Many Governments brought many legislation or schemes to promote such housing. Be it urban land ceiling Act ( Funny thing is this act was brought so that poor people should get house and it was repealed for the same reason) , Housing for economically weaker section ( EWS ) , Housing for dis housed (HDH), special Township schemes etc. etc.

Many concessions benefits were given  to promote such schemes. The Idea was to make available affordable housing for poor. But that didn’t happen because builder with help of politicians and bureaucrats siphoned off all these concessions and benefits in between. They didn’t reach to whom those were meant for i.e real, poor and needy flat buyer.

For example for special townships builder gets following concessions
i) automatic Non-agriculture permission.
ii) Exemption from Urban Land (Ceiling and Regulation) Act, 1976.
iii) Government land falling under township area leased out to the developer at the current market rate.
iv) The condition that only agriculturist will be eligible to buy agriculture land is not applicable in Special Township Areas.
v) Nno ceiling limit for holding agriculture land to be purchased by the owner/developer for such project.
vi) Floating FSI in the township. Unused FSI of one plot can be used anywhere in the whole township.
vii) The stamp duty rates applicable in the Special Township area are  50% of prevailing rates.
viii) A Special Township Projects are  partially exempted from payment of scrutiny fee for processing the development proposal.
ix) 50% concession in payment of development charge.
x) Development of basic infrastructure and amenities.

However there are some conditions also like

(a) Water supply. The developer is required to develop a source for drinking water (excluding ground water source) or get a firm commitment from any water supply authority to meet the daily requirement of 140 litre per person a day. This excludes water required for fire-fighting and gardening. The storage capacity provided should be 1.5 times more than the requirement.
(b) Drainage and garbage disposal. Environment-friendly disposal of sewage and solid waste management as per the norms of the state pollution control board.
(c) The developer has to ensure continuous and good quality power supply through captive power generation, or draw from the existing supply system.
(d) The developer must get prior environment clearance certificate from the Union Ministry of Environment and Forests (MoEF).
(e) Twenty per cent of the area is to be reserved for park/gardens/playgrounds.
(f) Eco-friendly amenities like solar water heating.
(g) 60% of the area to be purely residential and out of the total floor area proposed to be utilized for residential development, 20% of the same to be used for residential tenements of 40 sq m.
(h) Proper road area with the main road being 24 meters wide. etc etc

But what happens in reality.  Builders get all the benefits in advance, however when it comes to fulfilment of conditions. Both the builders and authorities keep mum. Whenever builders face some difficulty bureaucrats and politicians come to their rescue. Whenever builder finds any difficulty in getting commencement certificate they introduce a term called “conditional permission“which is totally illegal. Yes there two types of conditions some have to comply before work starts and others have to comply while work in progress.

For first type of conditions there is no excuse. Even then builders start construction and even before that they start selling the flats. But when it comes to the compliance of earlier or latter conditions authorities cry of having no authority to act on non- compliance or violations. When it comes to oblige builders , authorities read too much between the lines but when it comes to held builder responsible for some thing, they don’t even read what has been written in black and white?

For example
1)Central government by a notification on 28 February 2014 conferred state units powers to issue show cause notice to project proponents in case of violation of the conditions of the environment clearances issued by the said Authorities to projects or activities within their jurisdiction and to issue directions to the said project proponents for keeping such environment clearances in abeyance or withdrawing them, if required, for violations. But has any body heard or seen on their website of state units that have kept someone’s EC in abeyance or revoked it ?

2) i) It is  mandatory for the project management to submit half-yearly compliance reports
in respect of the stipulated prior environmental clearance terms and conditions in hard and soft copies to the regulatory authority concerned, on 1st June and 1st December of each calendar year.
(ii) All such compliance reports submitted by the project management are public
documents. Copies of the same shall be given to any person on application to the concerned
regulatory authority. The latest such compliance report shall also be displayed on the web site of the concerned regulatory authority.

Have you seen any of these documents on environment department’s website?

As per environ protection act and as per section 4 of Right to Information act all the documents pertaining to various permissions, compliances, authorizations , action taken reports and  plans must be in public domain. But what is the reality? . If you go to environment department’s portal, they have uploaded some information but that is insufficient and not in searchable mode, hence people can’t obtain any information they want. If you go to pune collector’s website it also doesn’t help. If you go to pune municipal corporations website, yes they have made available facility to obtain information on commencement certificates given and plans sanctioned thereon but it doesn’t work. Do you all this is just a coincidence? , certainly not.

Now what is the option for the flat buyers?. They must do some homework; consult some legal expert or  sensible people before investing their money.


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