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Realty Malpractices Bode ill for the Sector

Torbit - July 09, 2023 - - 0 |
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Realty frauds that made recent headlines tend to erode the trust and confidence of the property buyers  and investors and do not bode well for the sector which, post-regulation, has been getting more professionalised and transparent.

These unpleasant news headlines pertain to the National Capital Region that had earned bad name due to several malpractices related to defrauding of property buyers. So much so that lakhs of hapless  home buyers are still struggling to get their homes while authorities are coping to sort out the legacy issues plaguing the NCR realty.

In a recent shocking development, the Chairman of Noida-based real estate company  Supertech  R K Arora was held by the Enforcement Directorate on money laundering charges ,allegedly misappropriating funds sourced from homebuyers and banks. The news of the arrest of Ireo Group Managing Director, Lalit Goyal Under the Prevention of Money Laundering  Act (PMLA) was equally disturbing , especially as the promoter directors  of another NCR-based  leading  real estate group , M3M were held in connection with this case.

In the case of Supertech, it’s for the second time that the home buyers are facing harrowing times. Earlier, the home buyers of infamous twin towers in Noida  – Apex Tower & Ceyane Tower faced hard times as these towers were demolished by the authorities for violating building norms , uncovering a scam involving officials of Noida Authority. Now, with the arrest of Supertech chairman, thousands of homebuyers of the company’s incomplete projects  are worried about their fate , especially as the builder is already involved  in an NCLT case.

Further, the  malpractices by some affordable housing players of NCR is a  jarring development. What is all the more concerning is that these wrongdoings are happening in the post-RERA period. One such Gurgaon -based developer- Mahira Homes , has been booked by the Department of Town & Country Planning (DTCP) for submitting forged and fabricated plans regarding the license obtained in 2022 and the additional license in 2023. After the DTCP had ordered registration of a criminal case, an FIR was registered against the realtors. Haryana RERA had ordered a forensic audit of all five affordable housing projects of the group in Gurgaon after it found that construction at the sites was not in commensuration with the payments collected. from the home buyers.

All these murky developments tend to erode the confidence of property buyers especially when lakhs of housing units are still stuck for completion due to fund crunch or due to slow resolution of NCLT cases. What more , a large number of aggrieved home buyers are still suffering due to lack of effective execution of  RERA orders passed in the favour of home buyers.

All this betrays  the trust of home buyers in under-construction projects. It is significant to mention that according to the PropTiger report nearly 58% of potential home buyers in 2022, were looking for ready-to-move properties, due to development risks. Particularly the risk-averse home buyers are choosing safer options.

All such negative developments also tend to erode the realty sentiment index. One can however draw solace from the Q1 2023 Knight Frank-Naredco Sentiment Index that despite some marginal dip, it is still in the positive zone, demonstrating the confidence of property buyers and investors in India’s real estate. Though some unsavoury developments may create an impression that all is not well, yet the constant  ‘cleanup’ of the system being carried out by the regulatory and law enforcement agencies,  inspire confidence among stakeholders that the real estate ecosystem is being continuously reformed and revamped .

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