Tuesday, March 22, 2016

Understanding Builder's Language & Builder's Pains!

My grandfather used to say "It is my house I am paying the bills", my dad used to say, "This is my house I pay the mortgage", my generation is saying, "this is my house I pay the rent” …Csaba Gabor.

Looking at current situation & advertises in all the news papers or on hoardings, it seems that finally there are achhe din for home buyers! As all the advertises are telling how they are giving chappar phadake to the customer & lock the deal & offers like book a flat & get a car free or book a 2bhk & get a 3bhk in same price! Woow I have seen ads like buy 1 get 1 free for clothes & happy hours boards on bars with buy 2 drinks & get 1 free but never thought the bug will catch up with real estate some day! What’s more interesting that still the rulers as well media don’t think even now the homes have become affordable to common man. I am yet to understand the definition of affordable home & common man, both terms which we use so commonly!

And on such background I came across a write-up in Loksatta by Mr. Jayant Widhvans; it’s about making common home buyers aware about the current real estate scene rather about the builders & Mr. Jayant is financial adviser also, though his forte is more in stock i.e. share market. Actually he has pointed out some very basic lacuna's of governing systems of real estate but issue is he has blamed builders for that as well about marketing schemes of the builders also he has warned to readers. Presently there seems a trend in the media to blame the community named builders & its does gives good publicity as well people like it. Long back when then Big B used to beat up the bad goons especially gaon ka jamindar or any Seth, then the public used to be thrilled as they wished to do so but unable to do it by themselves & they saw themselves in the Angry Young Man Bachhan, making him Super Star! Same way now a day’s bashing up builders in social media is a fashion, agreed at some level builders acts only have given them this status yet some where a fact remains that Govt is unable or incapable to provide homes to every individual or needy ones & even people coming together & building their own dream homes also doesn’t seems feasible with current system of sanctions & noc’s & this is what has made the community named builder rising on horizon of every city!

If we take up the example of Pune city with population of nearly 40 lacs ask the question to our own self is the number of people happily & safely living in legal buildings (which may not be exactly Taj Mahal but are fairly well built & standing on ground) is more or the number of people living on streets of footpaths or in illegal building is more? Slums are there & nearly forty percent population leaves in slums but it’s because they can’t even get an illegal home in their budget & not because builders have cheated them! Yet Mr. Jayant states that it’s the builders who have wrecked the middle class families by their exorbitant costing which in a way is extortion of poor clients & many have left the projects in half way breaking the very dream of common man’s owing a home! For that he gave reference of architect Mr. Shahshi Prabhus speech where he says in Mumbai some 4500 odd societies have been left half way by the builder under the name of redevelopment making these families homeless! Well in Pune at least scene is much better & if at all homes are getting costlier or buildings are being left in half way then its courtesy of our Govt’s ever changing rules & regulations regarding real estate! For e.g. take present new TDR guide lines which are going to hamper many ongoing as well under agreement redevelopment projects of whose fate solely depends on TDR policy which everybody is uncertain of! 

If a builder buys a land on certain assumption of FSI permissible & TDR on it & suddenly in mid way if the policy changes then what he is going to do, build from own pocket sustaining losses? I think that’s what the writer expects & on such back ground he even suggested to the existing societies to develop their building on their own! Well at most places these people don’t even come together for simple things like monthly maintenance, so how are they going to get all necessary sanctions by applying professional people & get the construction & sale the extra units! Even if they do then what guaranty they offer to the new clients buying flats in such redevelopment projects when they have no experience of building a garage & will the author should guide to the new customers to book his flat in a building which is being built by bunch of some raw & inexperienced people; will he suggest to book with a new developer who has no track record as he himself later mentions not to book the flat in new or just started projects as there is no guaranty that these projects will get completed. Rather in the end of write-up under the heading, tips to the home buyer, author has said look out for builder’s track record & earlier completed projects; so what about a society building their buildings & someone taking risk of booking flat in such project? 

By the way does the author has any ways for the societies to raise the money for buying TDR as well all necessary development charges which goes in crores of rupees! He has mentioned loan by some cooperative bank at very low interest, please tell name of one society in Pune who has got that loan & then what about loan repayment if the society doesn’t get bookings as the very same author has suggested the readers not to book the flat anywhere in next three years as rates are going to get dropped! So who will find the buyers for the flats they build as well what about post possession maintenance service which only a professional developer can provide & has a track record of doing that! With this logic then there is no need of any professional in any field as why we need CAs or Lawyers firms, we can hire one or any law degree holder who can draft the agreements & give search titles, that’s all! Like any other industry real estate too is an industry & homes are built by professionals just the way we have automobiles or any such product. Yes there can be some bad elements but then there have been incidences of major auto giants taking back thousands of cars due to faulty designs & recently company like Volkswagen has been fined for millions of dollars for violating pollution norms, so shall people stop buying any car then?

In the write-up Mr. Jayant has pointed to a very important aspect of real estate system that registration department has no control of one flat being sold to numbers of buyers, they just registrar the deal & collect revenue! Very much true indeed but the very same registration dept does the same thing about land deals too & the threat looms on developers head who risks his money to buy a land, what about such risks which the builders has to carry, does the govt or flat buyers or any insurance company comes to the rescue of the builder in such land deal goes wrong because the landlord has sold the same land to many builders? Well with the logic of Mr. Writer then we should stop buying lands itself so there will be no question of building buildings on them! If the system governing the real estate is faulty & corrupt then it’s wrong for both the builder & buyer & even the new bill i.e. RERA wont ensure clear & transparent deals as it’s not just the law but the people who are supposed to implement that law are the real problem & blame goes on the builders as they are the people who are trying to build to earn by fighting such system & I am talking about the builders who asks for permissions as in this country law exists only for those who respects it.  

On other hand the very same govt who talks about bringing transparency in real estate legalize every illegal construction, well what Mr. Writer says about these publicly known illegal buildings & the people who knowingly have purchased flats in such buildings as it’s cheaper or so called affordable in compare to the legal buildings? Who guarantees safety of lives of residents in such illegal constructions & who will be responsible for any mishap, definitely not builders like me who  follows all the norms & in the process my buildings gets delayed as well costly, which as per the writer is exploitation of the common man!

Then going a step ahead, Mr. Jayant has given a dictionary for decoding builders advertises; below is his version & my version after that...

*If an advertise is saying, “few flat remaining”… the board is there since last year means no sale is there… Well this board is being used by shoe shops to even BMW, so means all industries are down, isn’t it?

*”Beautiful natural surroundings”... Means till now there are no buildings around & someday a tower will come up... What should one write then; wait till the buildings come around your building? If you write developed surrounding then you will be misleading the client actually so writing a fact is crime?

* Zero percent interest rate”… Builder has gone bank corrupt or broke financially so he is paying your money… I really pity  Author’s financial knowledge as a layman like me can say these types of fi8nanace schemes are in market of automobile industry for ages & even home loan institutes also tie up with the developer as they too have make business & home loan is biggest in demand business with every major bank in it. Decoding it as a builder is gone bank corrupt means doubting entire housing finance industry! Ultimately it’s an offer where you make some savings nothing more!

*”If you book today then discount up to two lac rupees”… Means we have increased rates by four lacs… Well well, have the writer checked the rates of yesterday? Then what about Amazon & Flipcart like online shopping giants, who advertise every fortnight Meg Sale up to fifty percent discounts? So let’s don’t buy anything online on Monsoon sales of Central or Phoenix malls, as discount means increased rates as per Mr. Jayant!

*”Getting a car or gold coin free”… It means taking out money from the pocket of buyer by small gifts in Marathi “Aawala deun kohala kadhana”… Again right from jewelers to automobile sector all uses such gift schemes so let’s ban all such products too!

*”Full page advertise, appointing movie stars brand ambassadors”… means the developer doesn’t have confidence on his quality… Well again Rolex has Roger Federer as Brand ambassador & Tata has Lionel Messy, shall we doubt now Rolex’s & Tata’s quality too! Even India Govt uses Amitabh Bachhan & Amir Khan as brand ambassador to promote Health Care or Tourism of the country, so that means all such policies of our country are weak or wrong & country has no faith in our capacities! Marketing is making people aware about our strengths & for that every company has their own ways to do so, it’s up to customer what they should look & buy the end product, isn’t it more correct way?

* “Announcing a big township”… Means the builder has got loans at very high interest… Well at-least here you are stating some truth as being non priority segment the real estate segment has to pay very high interest rate up to 16% even with nationalize banks. Joke is if you have to buy land for hotel or industry then the same banks pay you money at interest as low as 7% but for real estate no bank or financial institute gives money for land buying; this very fact     Mr. Jayant not knowing, I can’t believe! Sir, there are townships in Pune like MagarPatta, where the landowners have come together & developed the largest township as well at least five ongoing townships where the developer by joining hands with Foreign Investment Institutes at very low interest rate has bought the land. Rather the bigger the land size the more FII’s are interested instead joining hands with smaller builders, for your information only! It’s the smaller builders which have to go for high interest loans is the scene in real estate.

*“Sole selling agent”… Means you will never be able to meet you builder... Oh, so Mr. Ratan Tata or Mr. Akio Toyoda or Mr. Munjal should themselves sell the cars & bikes at the counter & should not appoint dealers! With the staff salaries & over-head burdens ever rising & office spaces becoming costly applying selling agents is the way by which we can keep our expenses down, the client can always ask when I can meet the builder & if then also the builder doesn’t shows of, the client is free not to book his home with such builders!

Actually why I felt like writing my reply to Mr. Jayant’s article, is not because I am hurt or felt humiliated due to his accusing to builders nor I doubt his intentions of making people aware but if you want to guide someone then you do it only if you know the proper address by yourself. Like in end he has appealed that if possible then not to buy the home for three to four years as the home prices may get reduced, very well but who guaranties it? In this country which has got curse of population explosion, land is limited to this is the only commodity like water which is going to get rare with each passing day & no logical explanation that land rates will get reduced & which hasn’t happened over the last fifty odd years is a fact! By such articles using the respected platform like Loksatta its indirectly misleading the readers by your ignorance regarding functioning & facts of the real estate industry is what I wanted to mention, so penned down my thoughts, so no hard feelings please! 

Rather Jayant Sir you are always welcome to find out the flaws in real estate & I myself along with my fellow colleagues will be always happy to assist to make this industry a better place where no Mr. Jayant Widhvans even by ignorance will be required to guide people not to buy their home, but will suggest buy it any time but with open eyes & mind, as that’s applicable to every product & all the time! 

Sanjay Deshpande

Sanjeevani Dev.


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