Happy

S Kamath, Balasubramanyam and A Pattar are among a group of 18 individuals who have just served a legal notice on a major Bangalore-based property developer for not completing a project near Hebbal which should have been ready by March this year.

Only the foundation layer has been done. So, even if the work takes off now, it will be at least another year before their block is up. Most have already paid Rs 6-9 lakh to the builder, with a good part from bank loans. Sampath, who booked his flat in early 2005, says he is paying a pre-EMI of Rs 4,000. All of them say the mental agony they’ve been going through is unbelievable. “We do not even get a proper response from the builder on why the project has been delayed,” says Balasubramanyam.

The Bangalore property boom is increasingly showing up its downsides. Many projects are delayed, some by as long as nine months to a year or more. Builders and realty observers attribute the delays partly to the shortage of manpower, material and construction equipment, given huge property development happening across the country.

The Centre is said to be proposing to mandate payment of a penalty at the rate of 1% of the value of the property per month. A Balakrishna Hegde, president of Karnataka Ownership Apartments Promoters Association (KOAPA), thinks 1% may be a little too high.

“Delays also occur because builders try to build a bank of captive customers,” says an observer. Customers are sold properties in land under litigation in the belief that the disputes would be resolved soon; in the belief that the new Comprehensive Development Plan (CDP) for Bangalore would lift the restrictions in those areas; and often without getting all permissions.

“By this, they prevent buyers from moving to rival builders. Invariably, they go wrong in their calculations about the time it takes to get all clearances,” says the observer.

Most major builders incorporate clauses in agreements that lay down penalties for every month of delay. But, as Sushil Mantri, MD, Mantri Developers, says, many builders find excuses not to pay up those obligatory amounts. Besides, even when paid, they hardly compensate for the loss of rental income or the mental agony.