Prelaunch builders in trouble

What would you do if someone offers a flat for just half the market price in a posh locality. You first jump with joy and start pooling the money required to purchase it. So did many others when some builders offered flats under prelaunch schemes. People sold their land in their native place or an old flat that they owned in the city. They withdrew all the savings and even pledged the small amount of gold belonging to wife and children, as well as took out a personal loan from a bank and also borrowed money from relatives.

And finally, they made the cent cent per cent payment to purchase the flat under prelaunch sales. Even before one could enjoy the thought for fulfilling the dream of own house, the prelaunch builders have started showing their true colours. While one is insisting on payment of an additional Rs 500 per sq.ft for taking up construction, another has served an ultimatum for payment of Rs 2,000-Rs 3,000 additionally to complete the construction. They are informing the buyers that they cannot complete the project with the previous price due to rising construction cost. Shocked over this, the buyers are now crying foul over getting cheated and seeking intervention of the State government for their rescue.

Where to hide?

Two years ago, another company sold flats at prelaunch rates in its project adjacent to a tank located between KPHB Colony Main Road and Usha Mullapudi Hospital. Around 300-400 flats were sold for less than Rs 3,000 per sq.ft. With the first phase of project already handed over to buyers, many were confident about the completion of the project and made a 100 percent payment as per the company’s mandate to avail the prelaunch price. With the recent rise in cement and steel prices, buyers are now being asked to pay an additional Rs 500 per sq.ft. It is not clear how many buyers reacted favourably to this new twist in the tale.

But a few of them are raising doubts as to how could a company which sold flats for half the market price which prevailed two years ago, increase the property price citing increased construction cost. They are also questioning what is the guarantee that the company, which has raised Rs 500 now, will not seek more additional funds later. Once an agreement is signed for a price, the developers should not increase the price, under any circumstances. It is his/her responsibility to complete the project and handover the flats to the buyers, notwithstanding the market scenario or the construction costs, without imposing an additional burden on the buyer. How is it reasonable to increase the prices after selling the property even before construction work begins, the buyers are questioning.

Urban Rise, and its harassment!

Speaking at a property show at Hitex recently, Minister KT Rama Rao said the builders are turning greedy. The Chennai-based Urban Rise which has launched three projects in Hyderabad, is a good example of that. The company, which initially sold flats informing the buyers that it would construct 22 floors during the prelaunch, has now increased the height to 33 floors. The largest flat which was previously a three-bedroom of 1,600 sq.ft size, is now a four-bedroom flat of 2,000 sq.ft. But now the company is raising fresh issues. Buyers are alleging that those who purchased flats under the prelaunch offer, are being forced to pay the GST amount and complete the agreements.

If that is the case, the buyers are lamenting that there would be no much use of purchasing flat under the prelaunch offer and advising others against it. The victims said they had took their issue to the attention of the Telangana RERA Authority. They are also questioning the Municipal Administration and Urban Development Minister KT Rama Rao is debating how the company, which sold the flats under prelaunch offer, was given permissions without levying the penalty of 10 per cent of the project value, as per norms. They are urging the government to initiate stern action against the companies like Urban Rise which are cheating people.

Buyers’ condition worse

While the pre-launch companies that sold flats for less than the market rate, without obtaining the permission of local civic bodies and a RERA approval are shaken, the situation is very bad for those who sold flats for just Rs 2,500-Rs 3,000 per sq.ft. It is doubtful whether the companies that sold the flats for Rs 2,000 per sq ft, will complete the construction at all. But the condition of those who purchased the flats is worse. They are on the verge of losing both their hard-earned money and also the dream of owning a home for themselves. Hence, many of them are seeking the government’s intervention.