In the year 1977, the film Gharonda hit the screens. It was a movie about a young couple investing their life savings in a flat that suited their budget. Their dreams however, never saw the light of the day as the unscrupulous builder defrauded them along with other home owners and ran away with all their money. Left high and dry, the couple had to start all over again.
That was 1977, a world where apartment complexes were as yet undiscovered wonders for smaller cities. In today’s rapidly changing urban landscape such multi-home complexes are sprouting up everywhere, changing our cities, stressing the infrastructure and hopefully providing homes to a whole lot of previously homeless people. And, yet in today’s date, even cosmopolitan cities with a sizable number of apartments being constructed daily, have many similar Gharonda like stories unfolding.
Take for instance Bengaluru: India’s IT capital has a slew of under construction apartment complexes launched in and around the airport over the past few years. Most of them, however, have been under construction for over 5 years.
During our own search for a property there, we looked high and dry for our perfect flat, visiting many properties from Brigade Orchard in Devanhalli to Nitesh Melbourne in Hennur Road, to the odd Sobha property in the north Bengaluru area. We wanted to buy a flat closer to the airport, given our propensity to travel. At one of the properties we met a young couple who were just taking possession. They had booked their flat at the time of launch, in 2008, but the possession was finally received in 2017. A good 9 years spent waiting for a flat. The gated communtiy in question is still not completely finished. That property has 905 units under construction.
We, finally settled down for a ready to occupy flat in Nitesh Columbus Square in North Bengaluru. Three blocks in the property had been completed, but it was stated to be completed in its entirety by 2016 end. Till date that has just remained on paper. The 3 other blocks are still not finished and the handful of residents living there are continuously being harassed by the builder for extra money on a daily basis. If that is not all, the builder wants the two dozen flat owners to create a resident’s association without OC and manage a property meant for 400 people.
Nitesh Estate is a known builder listed on the stock exchange, however, our closer scrutiny revealed similar tales of harassment across all their properties – Ceasar’s Palace supposedly completed (with 500 units), Hyde Park also completed supposedly (with 501 units), Melbourne Park under construction (with 490 units). The property owners are facing harassment at every stage of the handover process, whether it is under construction or ready to move into.
Another friend booked a flat in Hennur road, north Bengaluru, with Mantri builders. That property, Web City with 2000 units, was launched in 2013 and till date has not been finished, even though the website carries out information that the property has been completed. The buyers including my friend are trapped as construction continues unabated inside the compound. The final handover date for the community has now been moved to 2020. That will mean a good 7 years of distress for the flat owners buying a property in that community.
Incidentally we also had a bit of capital gains to park, so we thought of investing in a flat in the vibrant office complex of Manyata Tech Park. We paid a token amount of 1 lakh and promptly, the very next day we were presented with a letter to pay additional amount of 30 lakhs. This without receiving any legal agreement copy, allotment letter from the builder’s side. Needless to say, we cancelled the booking immediately. I am told that the cancellation amount will be 70,000 rupees and the balance 30,000 rupees will be refunded only after a year, if at all, to me. That property, Mantri Manyata Energia with 888 units, was launched in 2015 and the completion on paper, is supposed to happen in December 2019.
This is just half dozen properties of some of the relatively reputed builders. Bengaluru is also home to people who have purchased flats in smaller, stand-alone apartment complexes. Apartment complexes with 15 or 20 flats. These stand-alone complexes though not as delayed as the bigger gated communities, are also not free of issues. In almost all cases the builder has stretched and over- constructed, well beyond the limit mandated as per the approved layout and building laws. Once the over construction reaches a certain tipping point, the recourse of regularizing by paying one-time fine to municipal authorities is not easily available. Which means that year-on-year, the residents are fodder for earning quick bucks by corrupt municipal authorities. So, the residents living in small stand-alone apartments too are not free of harassment.
The 7 properties that I have mentioned above have a total of around 5600 flats. If one were to assume that on an average every potential flat resident will have 4 family members, we are looking at a total of 22,000 people being distressed by builder apathy of just these 7 properties.
As per some consolidated estimates there have been a total of 8796 new launches in Bengaluru as on date. If one were to assume that there are a conservative number of units launched in each property, say 200 units per property, we are looking at around 17 lakh flats in city precinct. Even if only 50% are affected that would be around 8.5 lakh flat owners being affected. With an average family size of four people, that would amount to 35 lakh distressed people across the length and breadth of Bengaluru. A sizeable portion of the urban electorate in Bengaluru, by any stretch.
And this is just one way of looking at the distress in an average middle-class citizens life. The other point of view relates to the monumental opportunity cost of such uncompleted structures. If one assumes that these 17 lakh flats fall on an average in the 50-lakh bracket. Then a 20% down payment would amount to 10 lakhs per flat. This amount is payable right at the time of booking, effectively locked till the property is handed over and registered. Even after discounting for investor and builder owned flats say about 50 % of the total, we still have approximately 1 lakh crore rupees of the 8.5 lakh middle-class home owners in Bengaluru, locked in flats that take anything above 5 years to get completed. This is a gargantuan loss to the economy!
When RERA was launched, most of us average joe flat owners in urban cities had hoped better, easier times were about to unfold. However, that has not been the case so far, especially in a state such as Karnataka where there is a tacit builder-politician nexus.
RERA which should have been a tool for addressing consumer grievance has become a tool for increasing Red Tape, general nuisance for the flat owners. The builder-politician coterie under a corrupt state government has subverted a tool such as RERA for their own gains. Aware chief ministers of other states, such as UP and Maharashtra, have acknowledged this problem and are taking steps to redress it.
Given that we are looking at Karnataka elections this year, this monumental harassment of urban citizens, both local and migrants, and the resultant loss to the economy, financial distress to consumers, is a burning election issue for the party that aims to usurp the ruling dispensation.
There are over 35 lakh urban house dwellers caught between the false promises made by real estate companies of all sizes and apathetic, literally somnolent political leaders with disdainful attitude towards Bengaluru. These urban residents are a political bullet that the ruling dispensation has dodged. The BJP should seize this moment and address their grievances in earnest.