Real Estate Sector: A Journey of Horror Stories and Future Prospects
Former MahaRERA chief Ajoy Mehta highlights the numerous horror stories in the real estate sector and the shift towards rental housing in his book 'RERA - A Perspective'.
Real EstateHorror StoriesMahareraRental HousingApproval ProcessReal Estate MaharashtraOct 07, 2024
One of the primary concerns Mehta addresses is the practice of builders selling properties without the required approvals. '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.
Another significant issue is the practice of developers diverting homebuyers' money to other projects or uses. This often results in the construction of the original project slowing down or even being completely abandoned. 'Builders would take money from homebuyers for a particular project and the same would be diverted to other projects or other uses,' Mehta notes.
The allocation of parking lots has also been a source of contention. Projects are often advertised with the promise of 'ample parking,' but the actual number and location of these spaces are not disclosed. 'At the time of possession, homebuyers found that the parking lot was located at a great distance away from the lift or the point where they exited the building, or it was of inadequate size,' Mehta explains.
Mehta also highlights the uncertainty surrounding the approval process, which contributes to the high cost of real estate. '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 writes. He emphasizes the need for predictability in the approval process to reduce costs and attract more investment.
Looking ahead, Mehta contends that there will be a growing demand for rental housing. 'In the future, with preference being shown towards rental housing, there will be a need for having legislation coupled with regulatory intervention to oversee this evolving sector. As rental housing develops, a whole ecosystem covering all aspects, including laws, markets, and standard exchange formats, would develop for ensuring a robust growth of this market,' he writes.
Mehta points out that rental housing is becoming an integral part of the urban housing response in many countries. In 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 India, however, the percentage is as low as 11%. 'The trend that appears to be emerging is that as urbanization increases and cities grow in size, they will witness a larger and larger proportion of their population opting for rental housing,' he adds.
Real estate affordability remains a major concern. 'In most cases, housing is almost unaffordable or takes away a large portion of the financial resources of the family, leaving very little for essential expenditure. While land forms a major part of the cost, the other factor adding to the cost is the approval process,' Mehta writes. He calls for interventions to reduce the time and uncertainty in the approval process to make housing more affordable.
Frequently Asked Questions
What are some common horror stories in the real estate sector according to Ajoy Mehta?
According to Ajoy Mehta, common horror stories in the real estate sector include homebuyers purchasing properties without the necessary approvals, developers diverting funds to other projects, and issues with the allocation of parking lots.
Why do developers divert funds from one project to another?
Developers often divert funds from one project to another to finance other ventures, which can lead to the original project being slowed down or abandoned.
What issues do homebuyers face with parking lots in real estate projects?
Homebuyers often face issues with the location and size of parking lots, which are sometimes located far from the building entrance or are inadequate in size.
How does the uncertainty in the approval process affect real estate prices?
The uncertainty and delays in the approval process can increase the cost of real estate as developers account for the additional time and resources needed to secure approvals.
What is the future trend in the real estate sector according to Mehta?
Mehta predicts a growing demand for rental housing and calls for the development of legislation and regulatory interventions to oversee this evolving sector.
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