Of hopes rising from the rubble

Last Sunday, citizens across India were glued to their TVs, not for a nail-biting cricket match played out between long-time rivals India and Pakistan, but for a demonstration of controlled demolition of two buildings, the likes of which had not been witnessed in the country ever before. The Supertech Twin Towers in Noida, NCR (UP) were brought down, bringing closure to a decade of litigation. The demolition sends out a strong message to those taking advantage of the builder-local administration nexus that has conjured a billion-dollar industry sustained on circumventing rules and resorting to graft. Two years ago, four towers in Maradu, Kochi, Kerala were also demolished on the grounds of violations involving Coastal Regulation Zone rules. In both the aforementioned cases, the Supreme Court refrained from regularising the unauthorised constructions. With regard to the Maradu case, the bigger tragedy was that the towers had been completed and were occupied by the residents.

Chennai also has a history of buildings that have run afoul of the law. Earlier in July, the Chennai Metropolitan Development Authority (CMDA) reported serving lock and seal notices to as many as 720 buildings across the metropolis. The notices were issued over a span of one and half years on account of violating the original building plan. Between 2021-2022 alone, 265 lock and seal notices, as well as 87 stop work notices were issued. The maximum number of violations were witnessed in the north zone which accounted for 40 per cent of notices. Of the 720 buildings, just about 5 per cent buildings have embarked on rectification work while one building with violations was demolished. Individuals associated with about 50 per cent of the buildings have opted for appeals and sought time for rectifications.

The Tamil Nadu Town and Country Planning Act of 1971 mandates a penalty of Rs 50,000 on any building that violates building approval guidelines. But this penalty can only be enforced through a court order, and the shortage of manpower in the urban body has resulted in a delayed action against those who have failed to respond to notices. When any such violation pertaining to residential buildings comes out in the open, it’s the investors or home buyers who are hit the hardest. About 77% of the total assets in an average Indian household is locked in the real estate space.

For most middle-class citizens, the investment made in a home takes up the savings of a lifetime, making it one of the single largest investments of any household. The triumvirate that fuels this investment cycle comprises the buyer, builder and the bank, and newspapers are rife with reports where buyers have been penalised for the defaults of the builder. The glaring inequality in terms of risk bearing in real estate had led to the genesis of the Real Estate (Regulation and Development) Act, 2016 which aimed at regulating transactions between buyers and promoters of residential as well as commercial projects. The Act also provided for establishing a State level Real Estate Regulatory Authority or RERA to monitor the sector and address disputes.

The presence of RERA and corporatisation of the sector are seen as positives for home buyers. But experts have expressed concerns that the new law should not be weakened owing to coercion from powerful developer lobbies. Establishing RERA in every State alone will not solve India’s real estate problems. Adherence to laws in letter and spirit, as well as ridding government bodies of corruption will be essential to protect home buyers and their investments.