Former MahaRERA Chief Highlights Real Estate 'Horror Stories' and Future Trends
Ajoy Mehta, a retired IAS officer and former chairman of MahaRERA, highlights the 'horror stories' in the real estate sector, including unapproved projects and diverted funds. He also discusses the future trends, particularly the shift towards rental hous
Real EstateMahareraHorror StoriesRental HousingAffordabilityReal Estate MumbaiOct 07, 2024
Mehta, who retired recently as chairman of the regulatory body, has pointed out that the uncertainty surrounding the approval process can lead to an increase in real estate prices. He also emphasizes the need for legislative and regulatory interventions to oversee the evolving rental housing sector.
Horror Stories in Real Estate
“The real estate sector is full of horror stories where homebuyers booked or purchased a flat not knowing that it did not have the relevant approvals at the time of purchase while the promoter was only speculating that he would get approval for the same,” Mehta writes in his book. He also highlights the practice of developers selling flats on the higher floors (which command a premium) without clearances from the civil aviation authorities.
Diversion of Funds
Another major issue Mehta addresses is the diversion of homebuyers’ money to other projects by developers. This practice often leads to construction delays or the complete abandonment of the project, causing significant financial and emotional distress to homebuyers.
Parking Issues
Mehta also discusses the problems related to parking lots. Most projects advertise ‘ample parking,’ but the homebuyer is often unaware of the total number of parking spaces available and their locations. This can lead to resentment when the homebuyer finds the parking lot is located far from the building entrance or is of inadequate size.
Future Trends Rental Housing
Looking ahead, Mehta contends that there will be a growing demand for rental housing. He believes there is a need for legislation and regulatory interventions to oversee this evolving segment. “In the future, with a preference for rental housing, there will be a need for legislation coupled with regulatory intervention to ensure a robust growth of this market,” he writes.
Real Estate Affordability
Real estate affordability is a major concern. Mehta notes that the uncertainty in the approval process and delays in obtaining various approvals have led to an increase in real estate prices. “There is a great deal of uncertainty in the approval process, and a lot of time is lost in getting various approvals. These delays and uncertainty have led to an increase in the cost of real estate,” he adds. He advocates for bringing predictability into the approval process and reducing the time cycles to make housing more affordable.
Global Context
Mehta also provides a global context for the rental housing trend. He notes that in countries like Switzerland, nearly 56.6% of the population resides in rental homes, while in Canada and the US, the figures are 33.5% and 36.2%, respectively. In South Korea and Hong Kong, 44.8% and 49% of the population live in rental accommodation. In India, however, the percentage is as low as 11%.
Conclusion
As urbanization increases and cities grow, Mehta predicts that a larger proportion of the population will opt for rental housing. He emphasizes the need for a robust regulatory framework to ensure the growth and stability of the rental housing market in India.
Frequently Asked Questions
What are some of the 'horror stories' in the real estate sector according to Ajoy Mehta?
According to Ajoy Mehta, some of the 'horror stories' in the real estate sector include homebuyers purchasing properties in projects that did not have the required approvals, developers selling high-floor flats without civil aviation clearances, and the diversion of homebuyers’ funds to other projects.
How does the uncertainty in the approval process affect real estate prices?
The uncertainty in the approval process leads to delays, which in turn increase the cost of real estate. This makes housing less affordable for many homebuyers.
What issues do homebuyers face with parking lots in real estate projects?
Homebuyers are often misled about the total number of parking spaces available and their locations. They may find the parking lot located far from the building entrance or of inadequate size when they take possession of their property.
What future trend does Ajoy Mehta predict in the real estate sector?
Ajoy Mehta predicts a growing demand for rental housing. He believes that as urbanization increases, more people will opt for rental housing, and there will be a need for legislation and regulatory interventions to oversee this evolving sector.
What is the current status of rental housing in India compared to other countries?
In India, only 11% of the population lives in rental accommodation, which is much lower compared to countries like Switzerland (56.6%), Canada (33.5%), the US (36.2%), South Korea (44.8%), and Hong Kong (49%).
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