Maram Satish Kumar, MD Maram Infra Group
In Telangana realty sector is in boom. As such, there is constant demand for residential as well as commercial properties. Because of Covid, there is no let up in the demand in spite of lockdown is clamped twice in Hyderabad. This is only one side of the coin. On the other side, the pre-launch events of realty projects are going on and also UDS business is booming as several developers want to reach top position in a jiffy. The situation is so alarming that some buyers find themselves in neck deep troubles because of the pre-launch sales and UDS sales of homes.
Some of the developers have been buying lands at exorbitant rates from land lords and later selling the UDS to get 100 per cent cash upfront. It is violative of RERA rules, but developers are not apparently caring for RERA rules. Even buyers are walking into their trap with the fond hope of buying property at less cost. The transaction appears to the genuine at the outset, but there is lot of scope for the buyers to get duped. Let us see some possibilities for buyers to sustain losses.
Doing away with registration and other charges
These transactions mostly pertain to sale of residential unit. The state government is closely studying the impact of doing away with the land registration charges and other charges. Such transactions are causing a dent to the government exchequer.
Violation of RERA rules
It is clearly indicated that the developers are clearly violating RERA rules. As a result, UDS sale unit buyers’ interests are not protected. The buyers of such units are regarded as not buyers of homes but as land owners. In case of delay in execution of the property, such UDS buyers are also liable for the loss along with the developers. There is scope for owners of UDS to be sentenced to undergo jail term and liable to pay heavy penalties. The RERA authorities have begun to show their authority while dealing with such properties.
Self-destructive model
Projects that conduct pre-launch sales through UDS can be termed as self-destructive models since developers of such models would have no good understanding about the cause and effect. Under the UDS sale, the realtor acquires land without investing munch in land. Later, they are not able to complete the projects due to lack of proper financial resources. There is no rationalisation between the UDS sale price and real price of the units. As a result, the complex situation is arises where in the developer would not be able to execute the structures. Moreover, such developers have no suitable experience to handle such projects. Therefore, banks are also not coming forward to lend money to such developers.
Corrupt model that affects ecology
Such projects have been impacting realty sector severely. They have made it questionable the existence of real developers. As pre-sale developers are promising high returns to the land lords, they are not coming forward to enter into Joint Development Agreement. Through UDS sale, the units are being sold at 50 per cent of the cost of the property. It is impacting the neighbouring projects. As a result, the developers have been facing financial problems and not able to complete the projects on time. The whole exercise is not only affecting the realty sector but also environment. In this backdrop, there is a concern among realtors that the situation reminiscent of that occurred during 2008-2011 would recur if proper action is not taken against UDS sale of units.
Regulation of UDS sale
- The prevailing situation is akin to a person cutting the tree branch on which he is sitting. It is suicidal.
To check such practices
- All developers should unite against such meaningless scheme.
- The developers should sensitise people on the ill-effects of such UDS sale of units.
- People should be encouraged to complain to officials about such sale of units and about the delay in execution of such projects.
- People should be cautioned through social media, electronic and print media against purchasing of properties through UDS sale.
- The government should be convinced to amend the laws governing registration of property and other such relevant laws since such transactions cause loss to the state government and affect the interests of the buyers.
- Such realty frauds in future can be prevented by taking prompt action against developers of such projects.
