Hyderabad: Developers’ body Credai cautioned prospective buyers to be wary of the RERA safety net missing for flats bought under pre-launches or as part of the undivided share (UDS).
Credai Hyderabad General Secretary V Rajashekar Reddy said both of these schemes announced by some developers do not satisfy the RERA rules and in the event of developers failing on their promises, little can be done to protect buyers’ rights.
Explaining the pitfalls, he said some developers have devised a UDS scheme. Under this, prospective buyers are shown as joint land owners. The size is corresponding to the upfront amount they pay to builders at the stage of buying the land. At this stage, the proposed project does not have any RERA approvals in place.
The builders, in return, promise to give a flat to the buyers at a rate that is lower compared to the rate that will be quoted for the project after it gets RERA approval. If the developer completes the project as per schedule, the buyers gets the portion as promised. This benefits the buyers as they get the flat at a lower price.
However, if the developer were to delay the project, the prospective buyers cannot seek umbrage with the RERA. “As per RERA rules, only those projects that have got the RERA approval should be advertised. RERA steps in to project the buyers’ interest only for approved projects. Here, the buyers got into an agreement before the RERA approvals came,” he explained.
Citing other areas where segment could face problem in the UDS transactions, he said that assuming buyers, who have got their share, decide to sell the unit at a cost lower than what the developer is quoting but higher than what he got for. This will again distort the market as other prospective buyers will force the developers to lower the price to that extent, he said.
“There have been instances of civic authorities canceling permission in certain lands due to varied litigations. In such cases, the buyers have nowhere to go. They would have paid the money but the project will not happen,” he said.
Rajashekar also said the RERA safety also net goes missing for pre-launch sales as RERA rules apply only to approved projects. The buyers benefit if the project goes on as per schedule. They will take a hit if the project is delayed, he said.
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