Saturday, March 14, 2015

BANGALORE'S PROPERTY PROMOTER'S NEVER ENDING WOES

 
http://bangalore5.com

Promoters by their shrewd planning contribute sky scrapers with attractive elevations to the city's face lift. Hence they are playing the leading role of building a 'Global city'. But the sad part is that the Government machineries are not equipped to develop the city and take it to the status of a 'Global City'. The Government boasts of providing quality infrastructure every time to a city. However, the quality of the infrastructure provided by the Government is such that a good road turns into a bad road within a couple of month. In spite of such never ending problems promoters continue to play their role and the promoters in Bangalore too is no exception. Like promoters in other parts of the country the apartment promoters in Bangalore too face many difficulties.

It is very difficult for a promoter to acquire land with a proper title. Most of the titles pertaining to land, on which apartments are built, are not 100% perfect. Purchasing land falling under the CMC and on the developing outskirts is risky as it may lead to prolonged litigation or some authority may find that the land is suitable for acquisition for the purpose of laying roads, bridges etc. Once the final notification is announced and the project fails on account of defective title, it is next to impossible for the owner to get the same returns. Further, in number of cases Government department’s personnel themselves present fake records as authentic.

Further there are maze of laws, rules and regulations, which the promoter has to comply with for the construction of an apartment. Most of these laws are so complicated that different courts interpret them differently and as a result there are several contradictory judgments on the same point of law. The promoter tries to comply with one law after the other but the chain is long enough to exasperate anyone trying to get to the end of it. Government officials take advantage of the law, which is in their favour, in taking decisions but often ignore other provisions of the law.

Construction on certain categories of land requires NOC from the Bangalore Development Authority and getting BDA permission is not an easy task. There is no law that can force the BDA to give its decision within a time frame. You will have to wait for long time and this is only the time where money speaks. Open your purse and take out currency notes, you will then see miracles wherein illegal would become legal. In expectation of loosening of purse strings, the BDA will not reject your application straight away even if it is not in order rather, it will make you wait till you open your purse.

The Government for developmental purposes has notified certain types of land, used for agriculture and other purposes, for acquisition. Even after lapse of 25 years, Government may not have taken possession of the lands as these are in various stages of litigation. The owners of such lands become very happy on seeing a buyer or a promoter because of the fact that they would get hundred times more money from the purchaser than what the pittance govern-ment would pay them by way of compensation. Further, once the purchaser starts con-struction work on such lands, troubles start coming one by one. He will have to walk through the corridors of various courts for decades to set the right damage and loss suffered by him. Whether he will succeed or not only time will tell. In the end, wisdom dawns on him that the system does not encourage true entrepreneurship.

Various statutory authorities want to enjoy powers without the statutory responsibilities that go with it. Usually they avoid taking statutory decisions and if by chance they did and thereafter anything went wrong they would find a scapegoat in the higher or lower echelons of the organizational hierarchy. While the authorities are very prompt in collecting stamp duties they do not take the legal responsibility of ensuring that only properties with proper titles are registered. Irrespective of the rules, the sub-registrars are always ready and willing to register the property provided a deal is struck successfully, if not they will raise various objections against registering the property.

According to certain rules, one cannot purchase any land granted by the government to a person belonging to schedule caste. If anyone purchases such a land, the government may direct him to return it, but the chances of getting back the money invested are remote.

Certain land laws are odd and very confusing. According to Karnataka Land Revenue Act, only an agriculturist can purchase agricultural lands but his annual income should be within two lakhs per year and he should be an agricultural labour. Probably, this peculiar law is in force only in Karnataka and Kashmir. Kashmiris can buy land anywhere in India but people from other states of India cannot buy land in Kashmir. While the government can acquire any land and form layout by paying a nominal compensation to the landowners, promoters or developers or individuals cannot do so because there is no provision in the law to make private layouts even though they are ready to fulfill all the terms and conditions imposed by the authorities. What is right for the government is not necessarily right for others.

Agricultural lands located at green belt area cannot be used for building any other construction and conversion of the land use in green belt is also not possible. However, they are entitled to construct pump set room and small farmhouse.

Another peculiar rule is with respect to the "change of land use." A shopping complex cannot be constructed on a land earmarked for residential purposes. An industry cannot be set up on a land earmarked for commercial use. Lands around Bangalore within a radius of twenty kilometers have been declared as "Green Belt" area on which no buildings can come up. Thus, no construction is allowed other than what is earmarked on the lands. Likewise, an apartment block cannot be constructed on a site allotted by the BDA. If the permission to change the use of land is denied, then the project can never see the light of day.

Even if the promoter is able to cross over all the hurdles and manages to get a proper land for construction, his problems do not end. He has to collect various documents to perfect the title deeds such as betterment charges, clubbing of khata etc. To regularize the property, the promoter has to put in great efforts at the revenue department. Thereafter he has to get the plan sanctioned by the engineering department. The plan has to move up from the Junior Engineer level and after passing through various cadres of engineers it finally reaches the commissioner level. After the building plan is sanctioned, the promoter has to obtain the 'certificate of commencement' and finally 'completion certificate' from the concerned authorities.

Getting the completion certificate from the Bangalore Mahanagara Palike is not an easy task. One among a hundred flats can get the completion certificate. The work cannot be completed unless and until the promoter parts with a huge amount of ‘speed money'. 'No money - no certificate’ is the unwritten slogan. None of the authorities will respond to your application within a fixed time frame if you do not 'take care' of them. In short, public administration has now come to mean public harassment. Delay in getting clearance and approvals leads to escalation in the cost of materials, wages and administrative overheads, which eats into the promoter's wafer thin margin. Apart from the BDA and the BMP, there are several others the promoter has to contend with. Various squads such as BDA squads, sales tax squads, income tax squads, revenue squads, KTPCL vigilance and inspection squads, prevention of unauthorized construction squads, swoop down on the promoter to collect their periodic 'mamools.' Whether the promoter makes money or not is doubtful but these people definitely do. The Lok Ayukta has already nailed some, but many are still at large fleecing the entrepre-neur.

The promoter has to shell out nearly 25% to 40% of the project cost as bribes and government fees. Then he has to earn something in the thin margin by way of profit. As a result, there is bound to be deviation from the sanctioned plan, compromise on standard construction, bad workmanship, poor finish and delay in completion of the project and as result some buildings come crashing down now and then bears testimony to these realities.

Then there are cases of missing files and bogus documents. Added to this are cases of genuine documents executed on bogus stamp papers. A promoter with such professional qualification   as a Bachelor, Masters Degree in architecture or civil engineering learns that his learned knowledge is useless when it comes to getting clearances, approvals from government officials.

They learn that the only way to get their work done depends on how successful they are in warming the hands of the officials 'under the table.' Normally, promoters are not in a position to invest the entire amount on their projects. It all depends on the amounts they have been able to collect from customers. Some customers don't pay promptly. Sometimes to make up the deficit, the promoters have to borrow funds at high rates of interest. Promoters are forced to pay compensation by the consumer forums to those customers for the delay in the project. On the delayed payments, however, it is difficult for the promoters to collect interest as such rights can be enforced in civil courts only which are a long drawn process. Of course, a few unscrupulous promoters do make fast bucks by throwing ethics to winds.

Under the circumstances, only those few promoters, who have the capacity to hold on to their apartments till they get high prices, can survive in this business. Those promoters who desire to construct apartments and budget flats for middle class citizens at reasonable prices are struggling hard to make both ends meet.

Unless attitudes change and the bribe culture is rooted out, it will be difficult for the quality conscious and value-oriented promoters to survive in the market. 
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)