Government’s orders: Pay only for carpet area, not super built-up

The builder lobby which has till date cocked a snook at the Civic Body's attempts to stop malpractices in the real estate sector, will now have a tough law to deal with.

This monsoon session, the government is planning to introduce a new consumer-friendly policy that aims to put developers on a tight leash while forcing them to sell homes on the basis of carpet area only.

Called Real Estate Regulatory Authority (RERA), the policy will have provisions for stricter punishment for those who refuse to tow the line, and make it easier for home buyers to seek legal recourse. Confirming the developments State Housing Minister Sachin Ahir told Mumbai Mirror, "Government has made a change in the draft model which will keep a check on developers who sell flats on the basis of built-up area."

Over the years, home buyers have been arm twisted into paying for more than what is the actual area of the flat. A 1000 square feet house in Juhu priced at Rs 25,000 per square feet, should cost you Rs 2.5 crore. But thanks to the inclusion of the built up area which puts the saleable area of the flat at 1350 square feet, you have to pay Rs 3.37 crore.

Though the civic body has banned the sale of flat on the basis of built up area, the builder lobby has largely ignored the diktat, thanks to the lack of punitive measures.

Ahir said, "No one is following the rules as the government has no control over the sector. That's why we are planning to introduce RERA in this session. This will also have various consumer-friendly provisions."

These include safeguarding the buyer's interest when developers renege on their brochure promises of playgrounds and open areas. "These would be the ideal situations when buyers can fall back on RERA, which will be armed with judiciary powers," Ahir said, adding, former judges will taken on board as committee members.

RERA may aim to keep a check on runaway prices, experts feel it could just have the opposite effect as well. Already facing a strong opposition from the builder lobby, it may just encourage developers to jack up the unrealistic prices further if they are forced to quote carpet area prices only. Experts warn a rise of 30 to 40 per cent in the prices, which will consequently hit the consumer who is already struggling with escalating home loan rates and unaffordable houses.

Speaking for the developers, Sunil Mantri, chairman of the Sunil Mantri group urged the government to make RERA "reasonable and rational." He said, "If the government is considering regulating the developers, it should also consider committing to better infrastructure. Besides, if the civic body sanctions the plan on the built up area, how can the government expect us to stick to carpet area without increasing the price?"

Mantri says all suggestions to the government to sanction plans based on carpet area only have been ignored. "Had it been done, we would have no problem selling on the basis of carpet area and everyone would have gone home happy."

If the bill is passed during this monsoon in its present form, home buyers should expect a bleaker real estate scenario in the next six months.

Source:- Economics Times