Checks and Balances: Geetanjali Minhas and four sector experts discuss the vexed problem of residential projects on hold, locking out prime land as well as finances
GN Bureau | August 11, 2022
Land in Mumbai city, which is surrounded by water on three sides, is scarce and has a premium.
Property prices in certain areas of financial capital of the country are as much as Rs 1 lakh per sq ft. Yet, 5,800 buildings have been lying in a stalled condition for the last 18 years. Meanwhile, 1,25,922 families, ie, 7 lakh people in Mumbai city were pushed to live on streets more than a year ago, as per the Maharashtra government. And the numbers have only increased since then.
After the National Capital Region (NCR), Mumbai has the maximum number of stalled and incomplete residential projects.
With builders cornering huge tracts of land, the stalemate has not only spoilt Mumbai's skyline, but also locked its precious land indefinitely.
In the latest edition of ‘Checks and Balances’, Geetanjali Minhas spoke to sectoral experts and stakeholders who said that as much as availability of finance is a problem for builders; diversion of funds and greediness on part of errant and greedy builders and residents had led to projects getting stuck indefinitely.
Watch the debate here: https://www.youtube.com/watch?v=Ra6sWtruxQk
R A Rajeev, Former metropolitan commissioner, MMRDA, and former commissioner, Thane Municipal Corporation, said that financial mismanagement on part of residents and developers, disagreements, different clearances and planning authorities, rent-seeking behaviour of tenants and residents and many other problems lead to projects getting stalled.
Niranjan Hiranandani, co-founder, Hiranandani Group and vice chairperson, NAREDCO, said that approvals, markets and capital are issues in most stuck projects. He said cash flow is an issue in most stalled projects and at least 25% of such cases can be taken up by structured corporate companies, provided the developer is ready and approvals are in place and there is agreement among the residents.
BJP leader Kirit Somaiya said that in most cases, due to fraud, forgery, willful defaults etc, projects may land in courts. Courts put stay on such projects or in other cases investigation agencies may take up such cases. He said such cases have led to a criminal waste of assets and land.
On massive unsold inventory with the developers in South Mumbai alone, advocate and consumer activist Anand Patwardhan said that with over 90,000 unsold projects lying unsold, under the prevailing situation the builder will prefer to stall the project rather than construct free homes.
Hiranandani added, “Whenever the markets go down, requirements of capital go up.” He acknowledged that the saleabilty of apartments with the developers has come down.
Rajeev said that housing is an imperfect market with a mismatch in demand and supply. Inefficiency creeps in with rent-seeking behaviour and expecting more money. He called for direct intervention of the government in housing to resolve existing problems.
However, Somaiya countered saying the government's job is to formulate and implement policies. He said 95% of land in Mumbai is governed by BMC.
Somaiya further said that world over rental housing is the emerging trend and added that unsold inventory of over 1 lakh homes in the city of Mumbai should be given for rental housing.
He also said that in cases of defaults by builders, financial institutions can take over such projects and give them on rent.
While the RERA Law was ushered in 2017, it applies to the new sale component and does not apply to redevelopment of old and dilapidated buildings of MHADA, SRA, cooperative housing societies and staff quarters where the residents are cheated by builders.
On this, Hiranandani said most redevelopment projects are under SRA or redevelopment under RERA and the authority is empowered to intervene and sort the issues. He observed that many problems have been sorted by conciliation panels even as he added that complex problems require intervention of all stakeholders.
However, Patwardhan countered saying in his own experience he has seen that unlike the Consumer Protection Act, the RERA is a builder-oriented law and does not penalise the errant builder or ever help consumer to get his flat for which he has already paid.
As a solution to come out of this impasse, the experts unanimously voiced for self-redevelopment.
Calling it a wonderful concept , Patwardhan said that with a project management consultant on board along with a lawyer, architect and a chartered accountant, the society can take all benefits which otherwise would be taken away by the developer. Now with banks giving loans to members for self-redevelopment keeping the land mortgaged implementation should not be a problem anymore.
Somaiya too encouraged consumers to opt for self-redevelopment and observed that greed on part of both the consumer and the developer have led to stalling of projects. He said the legislature, judiciary, regulator and builders associations have to come together for pushing the concept. He assured that he would personally discuss the issue with chief minister Eknath Shinde and deputy chief minister Devendra Fadnavis to formulate a policy with a time-bound action plan with a monitoring group on a war footing.
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