Accustomed to easy money,builders new ‘schemes’ to cheat buyers

With the implementation of GO No 86, the construction sector in Telangana fell in line and has been witnessing steady growth. Builders are selling flats only after getting all the permits. But after the formation of the Telangana government for a second term, especially since 2019, some developers have opted for the illegal route. Without much effort, the builders are finding new ways – UDS, prelaunch, soft launch – to earn money and collecting crores of rupees from buyers, promising low rates. But with the RERA initiating stringent action, they have come up with a new name for their illegal business.

Till recently, some realtors and builders were selling flats under the UDS schemes and registered the undivided share (UDS) of land, when the buyer invests in the project. But they are not in a position to continue these schemes anymore after the Telangana RERA started cracking whip against such frauds. Instead, the realtors and corporate real estate agents appear to have decided to discontinue the names like UDS, prelaunch, soft launch and are now collecting money with the name of ‘land pooling’ scheme. Others are promising high rents, if the buyers invest in construction of their office and IT complexes. Companies like the RJ Group have gone a step further. With an overconfidence that they are immune to RERA’s radar, they are advertising on television channels with this scheme without even obtaining RERA’s approvals. They are posting the photographs of their own staff who posed as ‘happy’ home buyers and advertising in mainstream media, in order to dupe new customers. Despite the number of such announcements, it is well known that the RERA will impose 10 per cent of the project value as penalty for such illegal sales.

EIPL Land Pooling

This company is an expert in UDS and pre launch sales. In recent times, they have started bombarding the digital media with the new scheme of ‘land pooling’ and trying to con home buyers. Under the new scheme, the company is planning to develop a huge project in 150 acres at Pedda Golconda near Maheshwaram and inviting people who want a good return for their investments to buy property in their project. The company management has fixed a price of Rs 4.5 crore per acre land i.e. approximately Rs 675 crore. If not fraudsters, who else would resort to such illegal collection of such a huge amount from prospective customers, without even obtaining necessary permissions from the local authorities and also the RERA? Why does not CREDAI Hyderabad cancel the membership of such a deceptive company?

The promoters of this company who are experts in UDS and pre launch sales, filed cases against each other a few years ago. The issue has caused a stir in Hyderabad’s realty sector. But why the construction associations entertain such an organization, remains a big secret. CREDAI Telangana, which has to act very responsibly, has recently presented an award to this organization in a category. Though the president of this association might justify that the award was presented for a different project, how can an award be announced notwithstanding the quality of project, when the fundamental rules of CREDAI itself are violated. Each member of CREDAI who takes membership of the Confederation signs an agreement to strictly abide by the Code of Conduct and such illegal sale of properties without prior permissions is clearly a violation of this Code.

If a builder who takes up projects under sells flats/properties through UDS, prelaunch or other schemes without obtaining requisite permissions and in violation of the CREDAI Code of Conduct, his/her membership in the organization should be suspended or at least their applications for the prestigious CREDAI awards should be rejected outrightly. Instead, the CREDAI members chose to present an award to such a developer, which indirectly means encouraging such illegal sales and justifying the collection of money from buyers without obtaining approvals from relevant authorities. People are finding it disheartening to see a responsible organization like CREDAI Telangana, which is supposed to create awareness among people against such fraudsters, is now allowing them to take advantage of CREDAI awards to lure more investments. However, the Telangana RERA also must react to such schemes and clarify if the rules permit the developers to collect money from home buyers towards land pooling, without obtaining requisite permissions from all the authorities including RERA itself.

Cheating with tokens?

When someone purchases a flat or plot, a receipt will be issued upon payment of money. But recently some developers have started giving token numbers, promising to assign flats based on this token number. Thus, Hyderabad’s realtors have introduced a new method of selling flats to the world using tokens. Some clever promoters and developers who think that they are different from others in the market, invented a new term for prelaunch sales – ‘Expression of Interest’. They are taking up sales offering lower prices than the market and seeking advance cheques from customers in this regard, with a promise to deposit them in the bank only after obtaining RERA approvals. Thus, they are quoting a launching price of Rs 8,500-9,000 per sq.ft for flats and are selling them for Rs 7,000-Rs 8,000 for issuing cheques.

And the land belongs to the company …

Meanwhile, a few financially strong companies are purchasing land in advance and selling the flats before the permissions are issued. Though buyers might not face any troubles from these builders, one cannot assure whether these projects will be completed in time? Since the terms apply only after RERA’s permission, buyers will not be in a position to question the builder if there is any delay. They also might face more challenges if flats are sold more than the allotted numbers.

Habituated to easy money (Box)

Some developers are least bothered to find the right site for their project, and discuss with architects and designers on what type of apartment can be constructed in the available place. They are not even worried about legal issues. They neither seek necessary permissions nor NOCs (No Objection Certificates) from the local authorities. They would not care to wait for RERA approvals or organize a grand launch of their projects. All that this new breed of realtors are interested in is coming up with new schemes to lure investors and make some quick money. Unlike other builders who struggle for nearly two years to complete their projects and even file taxes appropriately, these fraudulent developers are focusing only on conning the genuine home buyers. People must remain cautious of such fraudsters.