A majority, who were to get their flats by December 2012, are now knocking at every door in a desperate bid to ensure that developers do not cancel their allotments. “The developers are trying every trick with the original set of buyers to ensure that their allotment can somehow be cancelled. They have gone to the extent of hinting rude behaviour could invite cancellations,” said Sweta Bharti a member of Noida Extension Flat Owners Welfare Association (NEFOWA), which is fighting the battle on behalf of the flat owners. Another member of NEFOWA adds that a large number of complaints have been received against five companies — Paramount, Palm Olympics, Supertech, Devika Builders and Earth Infrastructure.
“Many companies have cancelled allotments of various buyers who are from smaller cities. Their voices are not registered, as a large number of them are not a part of our association directly,” said Indrish Gupta, another member.
Buyers allege that developers are using all available options to ensure that the original set of buyers are divested of their flats, which can then be resold at a higher rate. In a majority of the cases, the consumers are faced with a Hobson’s choice. With a number of these developers having defaulted on the payment to be made to the Greater Noida Authority, banks are not disbursing loans to buyers of these projects. This has resulted in buyers falling back on payments, a pretext used by builders to threaten cancellation of allotments.
Information sought under RTI shows that Earth Infrastructure, Devika Builders and Palm Olympia have defaulted on payments to the authority. “Every bank comes to the authority for no-objection certificate before disbursing loans. Now, if the builder has defaulted on payments to the authority, the banks will not disburse loans,” said a senior official of the Greater Noida Authority.
One buyer, who booked a flat in Supertech Eco Village 2 – a part of which is on the land that has not been approved for construction by the court order – has been asked to pay his next instalment.
The buyer is unable to pay up, because his bank, which had approved the project earlier, is not disbursing his loan on account of the court order and would release it only after carrying out its due diligence. Developers are invoking the builder buyer agreement (BBA) for cancelling allotments. “There are various tricks played by the developers to cancel old bookings. The builder is quoting one clause from the BBA to cancel my booking but the agreement also says that the builder will pay a penalty in the case of delay in possession. The possession was scheduled for December 2012 but it has been delayed by three years. The developer has said that a new agreement will be signed . This is clearly a case of twisting rules to suit them,” the buyer said, on condition of anonymity.
This is just one illustration of the situation that several buyers are caught in: non-disbursal of the loan on one side, and the demand for penalty payments.
A set of buyers, who had booked their flats with Earth Infrastructure, complain that the developer is arbitrarily changing their payment mode from a flexible plan to a construction-linked plan. The change would cost the buyers an additional Rs 1.5 lakh. “All this is being done to extract more money from us. We are meeting with the developers on the issue but nothing seems to be working out,” says NEFOWA’s Gupta.
Detailed questionnaires sent to Palm Olympia, Supertech, Devika Builders and Earth Infrastructure on Wednesday did not elicit any response. Paramount was the only company that responded saying that their project is bank approved but did not speak on the disbursement to consumers. “The project ‘Paramount Emotions’ at Greater Noida (West) has already been approved by HDFC, Corporation Bank, DHFL and Indiabulls, they have already started the login process for the loans of customers,” said an email reply from the company.
Why ruin trust?
Businesses all over the world run on trust, and tweaking the rules of the game only leads to dilution of trust, a chance that no businessman would ideally like to take. But at Noida Extension, or Greater Noida West as it is known now, its a different game altogether. Bharti says that the rate of property in the area has almost doubled in the last one year. “When I had booked my house in May 2011, I paid at a rate of around Rs 1,900 per sq ft and that has increased to Rs 3,300 per sq ft now. That is one of the reason why these developers want to replace older customers with new ones,” she added.
Noida Extension was marketed as an opportunity for the affordable home seeker, which brought customers in droves. What turned the dream sour, was an order by the Allahabad High Court in May, on a petition by farmers, that quashed the acquisition of land in three villages of the proposed Noida Extension area. Later in October, the High Court ordered the suspension of any construction activity in the area where land acquisition has not been scrapped until it was ascertained that the development work was in accordance with the norms laid down in the master plan of the National Capital Region Planning Board.
In 60 other villages, farmers would receive an additional 64 per cent compensation and they would get 10 per cent of their acquired land after it has been developed by the authorities, subject to a maximum of 2,050 square yards.
Are developers constrained to find ways to charge more from buyers who have already bought into the project, or is it being done with an eye on higher profits? To arrive at an answer, let us look at the mathematics of it. The area has around 2,50,000 flats and around 1,00,000 have been already booked. Developers have 1,50,000 flats from whom to recover the increased cost of land acquisition, considering that they were making profits from the earlier sale price. The rates in Noida extension have almost doubled, which means the developers can sell 1,50,000 flats at a double the earlier rates. This should give developers enough money to cover increased land acquisition costs and also book profits.
Noida Extension buyers, who are knocking all doors for help, are not getting any help for now. “We cannot do anything about it. It is between the developers and the buyers and they will have to sort it out among themselves. Even if we receive a complaint, we can only forward it to the concerned developer requesting him to do something about it. They can only get help from the consumer court,” said a senior official of the Greater Noida Authority.