Home buyers collaborate with builders to complete projects
Instead of locking horns with builders over long delays, they are trying a collaborative approach in which they fund the completion of their homes but demand oversight of the expenditure and progress of the project.
With builders pleading they are unable to raise funds to complete projects, buyers’ associations are chipping in at Uniworld Gardens II and Residences (Unitech), and Aloha (Aerens Group), in Gurgaon. In Noida, similar efforts have been mounted at Celeste Tower (Assotech Group) and Lotus Zing (3C). Other builders such as Amrapali and Jaypee Group, who had launched thousands of flats across Noida, Greater Noida, and Ghaziabad, are also trying to get buyers to collaborate, especially in projects where their dues from buyers exceed or are close to the cost of completion.
“Now, we see some hope of getting our flats completed,” said Rahul Aggarwal, president of the residents’ welfare association (RWA) at Unitech’s Uniworld Garden II in Gurgaon. The project is five years overdue and, Aggarwal said, buyers had grown tired of making the rounds of the construction site and the developer’s head office. So, when the Haryana government nudged the builder to speed up work, they too decided to play along.
“We wanted our flats and realised that going to court was not an answer as that would have delayed the delivery further,” said Vikram Bishnoi, RWA president at Unitech Residences.
Sanjay Chandra, co-managing director of Unitech, said they agreed to take buyers’ representatives on their monitoring committee to restore confidence in the management and get buyers to start paying their dues. Although payments from buyers will not suffice to finish the projects, Unitech has promised to bridge the gap, and expects to hand over 1,400 apartments by the year-end. It has also replicated this buyer-builder monitoring body in its other residential projects like Nirvana Country II in Gurgaon and Unihomes I in Noida.
Rohit K, who bought a flat in Aloha, has been paying an EMI of Rs 37,000 since 2005, and his rent has also increased to Rs 23,000 a month in the past 11 years. But now that Aerens Group is collaborating with buyers to finish the project, Rohit is “hopeful of getting possession of my flat by December this year”.
Shrey Aerens, promoter of the group, said they are comfortably placed in terms of funding as finishing the flats will cost Rs 7.5 crore, as against their receivables from buyers of Rs 9 crore.
The construction stalemate in NCR started because builders diverted buyers’ payments to start new projects. But this rollover funding model crashed in the downturn of 2008-09 as new bookings and also funds from banks and private equity dried up.
By allowing buyers’ representatives to monitor projects, builders hope to end the trust deficit. The payments received from buyers of a project are held in an escrow account and cannot be withdrawn without the signature of the representative, nor spent outside the project. To tide over any shortfall, the builder raises funds through block sales of unsold units and other sources.
Assotech has opened an escrow account for its Celeste project in Noida, and handed over 49 of 362 units. Although it faces a shortfall of Rs 35 crore, it has promised to finish the project this year. 3C’s Lotus Zing project in Noida that was launched in 2010 is also being finished under a similar arrangement. Its RWA president, Sunel Kant, said construction had resumed in January 2016 and fit-outs will start in two of the 16 towers in June. The entire project with 2,454 apartments is expected to be ready by May 2017.