(The article first appeared in The Economic Times)
Several home buyers find themselves trapped misled by developers and mortgage lenders. Many buyers had booked apartments in the past months banking on assurances of realty companies and mortgage lenders that the respective housing projects will get lenders' approval shortly and thus will make buyers eligible for the requisite loan.Months after having made bookings , buyers are now realising that even as the next payment installments come due, lenders are not sanctioning loans either because the project doesn't have government approval or for lack of progress on the project.
Tridib Sen (name changed), a 35-year-old Delhi-based lawyer, is one of many home buyers struggling to get his home loan sanctioned. Mr Sen booked a three bedroom apartment in Vatika India Next, a housing project in Gurgaon in last June, through property broker JLLM. While making his booking, he had also consulted HDFC executives, who had assured him that the project was in-principle approved by the lender and formal approval was just a week or two away. As months passed and Sen paid around Rs 10 lakh in three installments for the flat priced Rs 55 lakh, HDFC kept delaying loan sanction, while giving assurance that it will come soon. The real reason was that Vatika's project was yet to be approved, as the project still lacked some government clearance.A Vatika group spokesperson said: "The process (of approval) is at a very advanced stage with HDFC, LIC etc with whom we also have long standing relations and approval for dispersal of home loans is expected to commence very shortly." An HDFC spokesperson said the project has now been approved and disbursal will start, but Sen is yet to get any relief.
Another HDFC executive, who didn't want to be named, told ET that there are many projects in the NCR region, including Vatika's, which have not been approved so far. "There are several projects, which do not have government approval, and there are many others, where there is hardly any construction. We have stopped giving new loans for many projects, which even though approved, have no construction activity," he said.Besides, many developers have been issuing large advertisements, where they use the name of mortage lenders as finance partners, giving buyers an impression that if they were to book an apartment in those projects, they will easily get loans from the named institutions. Lenders do not have any objection to such advertisements.
"We allow developers to use our name in advertisement because we want to fund those projects. If advertisement says finance available from certain institution, it doesn't necessarily mean, the project is approved. And this in no way put customers at risk," said the HDFC spokesperson.A ICICI bank spokesperson said: "We have always funded properties on approved projects only. We communicate this clearly as well since we always ask for details of the property that the customer is purchasing."
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My name is Deepak and i'm based abroad. I've booked 3 B/R + S with Vatika and have paid till date Rs. 11.85 lacs.
ReplyDeleteI fully empathize with Tridib Sen who had booked 3 B/R in Vatika, as i'v gone through exactly the same..
For last 6 months both Vatika & HDFC have been giving impression that Vatika's Project India Next is in an advanced stage and it will get approved in couple of weeks...That couple of weeks has not come since last 6 months.
Both Vatika & HDFC are claiming that loans can be sanctioned. But approval of loan is purely on the credit appraisal of the borrower. So even if the loan is sanctioned the disbursement cannot be made if the Project is not approved. So in the process the customer also stands to lose the processing fee (if the Project is not approved even if the loan is sanctioned).
I would like to know if anyone knows Vatika's construction time frame and what constrcution milestones would be reached by what time? All we know is payment schedule linked with ceratin milestones - but with no knowledge of the time frame of thise milesstones.
I've been in touch with the CRM Head of Vatika and also theie senior management including the Chairman. All that has been assured is "delivery", but with no clue as to the definitiveness or the timel schedule.
There has to be a mechanism in place whereby Developers are allowed to market a product only if approvals are in place. For instance if it is made mandatory to disclose the " approval status " as a statutory requirement when advertising, we could be aware when we buy/book
ReplyDeleteWhat beats me is the attitude of the government. We have a body to regulate stock market That is SEBI; we have a regulator like TRAI for telecom services, IRDA for insurance. However, political interest has kept the government away from any such regulator for the property market. We spend a couple of thousand on stock market and be assured there's a regulator who'll protect our interest, but when we invest several lakhs on a property, we are not sure if our interest will be protected from the unscrupulous builder and promoters. Government sucks, isn't it?
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