Buyers in agony over delayed housing projects in Pune

Buying a home is not just fulfilment of a dream, it is also the costliest purchase of a lifetime. When Pune’s realty sector boomed in the mid-2000s, many people from other cities eagerly purchased property as they were attracted by the prices, Pune’s cosmopolitan ambience and its salubrious weather.

However, many middle class buyers feel cheated and harassed, especially due to the problem of delayed possession. Alok Goswami, who bought an apartment in Kumar Kruti, Kumar Urban Ltd’s (KUL) project in upmarket Kalyaninagar in March 2006, has not received possession even today, five years later.  

A software professional currently based in South Africa, Goswami said he suffered a cumulative financial loss of about Rs4.5 lakh, which includes loss of rent that he would have earned had he been given possession as per commitment.  

Goswami is livid and said he had lost trust and confidence in the firm. “Every time, there are promises but no results. There have been promises of possession and compensation for the past two years, but no promises have been kept as yet. I have submitted written letters for compensation, but this has had no effect yet,” he said in an email to DNA.  

Like Goswami, at least five buyers from the Kumar Kruti project communicated with DNA, highlighting the delay in the project and the financial loss and mental peace they suffered as a consequence.

Sameer Shaikh from Bahrain wrote in an email, “I booked the flat in Kumar Kruti on November 12, 2006, and registered the property on July 11, 2007. Now, as per clause 5(b) of the said agreement, Kumar Builders have agreed to hand over possession of the flat completed in all respects on or before December 31, 2009. However, it is almost 14 months and they have neither handed over the apartment nor given monetary compensation.”  

Jayesh Shinde (name changed), a professional consultant in mobile communication area, said, “They (KUL) sent me a final demand letter and asked to take possession some time in June 2010. But when I visited the site, I found that my flat interior was almost complete but there were many issues which I reported them to resolve. I have not received much response to it. Moreover, at that time neither the building was complete from outside, nor a road built. Construction were going on. It was completely unusable for peaceful accommodation.”

Since he booked his flat in November-December 2007, he has suffered a loss of around Rs3 lakh.

Caught in a similar predicament is Amar Lungare, who purchased a flat in Periwinkle, a project by Phinix Shelters Pvt Ltd in Baner. The possession was delayed by over two years, which resulted in a cumulative financial loss of about Rs4 lakh to the software consultant.

“I was paying EMIs for the new apartment and staying on rent while the construction got delayed,” he said.   After he got possession of the apartment, he realised that the building did not have the mandatory completion certificate from the Pune Municipal Corporation (PMC).

Most of the amenities are still under construction, causing inconvenience to those living on the premises.  

Shankar Mahabal, who also bought a flat in Periwinkle, suffered enormously as he had got his daughter admitted to a school close to the project, relying on the builder’s promised date of possession. “Due to the delay, I would have not only lost all the money I paid for the admission, but considering the competition, it would have been impossible for me to get her admitted to another school,” he said.  

Buyers also complain of the lackadaisical attitude of the builder when they ask about possession. Company representatives refuse to respond to repeated queries.

Adding to the financial burden suffered by buyers due to delay in completion of projects is the new service tax rule that came into effect in July 2010, according to which a 12.5% tax is payable on construction services. This meant that many buyers had to pay the tax on possession even on apartments that were delayed due to no fault of theirs.

“If my apartment had been ready as per original commitment, I would not have had to pay the amount,” said an aggrieved buyer.

Buyers of flats in Crossover County on Sinhagad Road by Darode Jog also complained of delay in possession. According to Parag Borawake, general manager, Darode Jog, “The last possession was given 5 to 6 months ago. We have also waived the service tax payable on a case-to-case basis. We have taken the tax burden on ourselves.”

According to Ravi Karandeekar, real estate expert, some builders take bookings and invest the money in another project, thereby causing delays. “For many builders this has become a business policy,” he said, not naming any specific builder.  

As a real estate watcher, Karandeekar warns buyers against falling in the trap of taking over the apartment even before the entire project is completed (as in the case of Periwinkle). “This is called false possession. People get carried away due to the losses they are facing, but without completion and occupancy certificates, the dwelling has no legal standing, especially in the event of a mishap like fire,” he added.  

Wanting to caution buyers, Karandeekar said, “In most real estate projects, buyers book apartments that are showcased at conceptual level only. Even plans are not passed and the bookings begin. Buyers must understand this.” He cautioned buyers against allowing themselves to get exploited because they are not aware of their rights.