Paying six per cent interest on flat cost for delay a huge burden: Realtors

Developers have said construction at sites were haulted in April and May due to lockdown and projects would be delayed because of the lockdown.
Property developers said that the Supreme Court order asking a developer to pay six per cent interest on a flat's cost to buyers for the delay in delivery of properties, will be an additional burden on them. On Monday, the Apex Court ordered DLF Homes to pay six per cent interest on flat's cost for delay.

But many in the industry said the implementation of the order is challenging. "In Rera (Real Estate Regulation and Development ) Act here is already penalty for delay in delivery of a project. Anything additional will be a huge burden", said a prominent developer in Mumbai.

While different states have different penalties under Rera, in UP if a project is delayed, developers are required to pay 10 per cent interest to the buyers on the invested amount. The developer said it will be tough for developers in current conditions.

"SC needs to candidly also evaluate force majeure events before making such calls. While it is give full benefit to the buyers there is no protection offered to developer which I believe is unfair," said another NCR-based developer.

A managing director of a advisory firm who did not want to be quoted said implementation of the SC order is tough.

"In my view, execution of these judgements has been an issue. Builders don’t abide by these judgements and for the buyer, to go through the civil court process is costly and time consuming," he said.

He added that builders would give excuses like force majeure or delay in payments by the buyer etc in order to not pay and litigate." Unless there is a separate legal mechanism to resolve property disputes, the balance is not in favour of individual buyers," he added.

Developers have said construction at sites were haulted in April and May due to lockdown and projects would be delayed because of the lockdown.

However, Anuj Puri, chairman of Anarock Property Consultants said that latest Supreme Court verdict sets a new benchmark of acceptable conduct in the real estate business.

"In the recent past, despite several RERA rulings favouring homebuyers across states, there was little actual on-ground action in terms of homebuyers getting back their penalty amounts or possession of their flats. This is essentially because RERA is not really an execution authority. This move by the Apex Court further strengthens the hand of homebuyers and sends out a firm signal to stakeholders to treat their customers fairly and not take them for granted," he said


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