Monday, July 07, 2008

Springfields apt owners face eviction

the builder in collusion with Corrupt BDA officials along has violated all building norms. Now BDA officials are expressing surprise. They should be sacked for their incompetence. Seven towers don't spring up overnight. I hope the residents bring the builder to book. Add IDEB builders to the list of builders to be avoided. Deccan Chronicle article here. As per the latest news the builder has to pay 25 rs sq/ft to BDA as a penalty to get the commencement certificate and then apply for the occupancy certificate. With 697 apts in the complex and 7 wings illegal (A,B.C are legal and D-J are illegal) the builder needs to cough up roughly 697 * 7/10 * 1500 (avg flat size) * 25 which is 18,296, 250 (1.8 crores)

1,300 residents left in lurch

BENGALURU

More than 1,300 residents including software engineers, bank officials, doctors and expats who have invested crores of rupees for a flat in Springfields Apartments will soon be homeless if the builder does not sort out the issue of occupancy certificates within seven days.

Springfields Apartments on Sarjapur Road which is said to be one of the few residential projects in the city with 82 percent lung space and just 18 percent of built up areas has built seven wings which includes nearly 50 flats in each wing without the commencement and occupancy certificates.

The residents who went to BDA authorities with complaints of the discrepancies are now facing a tough time running after the builders, advocates and the BDA authorities.

“The officers at BDA who promised to deliver justice to us have now sent an order asking us to vacate immediately. The builder in turn has been given seven days time but what about our woes? Who will listen to us,” said a techie on condition of anonymity.

Meanwhile, the residents told Deccan Chronicle that everyone had relied upon the BDA’s sanction plan and had together paid several crores of rupees to the developers towards acquisition of their respective apartments.

The directors Mr H.S.

Bedi, Mrs Avneet Bedi, Mr Pradeep Kumar Tewani and Mr P K Gajra have not only violated the statutory provisions but have also conducted criminal breach of trust, the residents of the apartment allege.

“The builder also said that BDA had issued occupancy certificates to all these buildings and only then hundreds of families occupied these apartments. Now, we learn that BDA has not issued occupancy certificates to many of these blocks,” said another resident, an expat.

The residents who actually started this protest to show a violation have now been rendered homeless.

“Where do we go? And why should we go? It was not our mistake. Why are we being targeted for no mistake of ours,” cried a doctor, who is residing in one of the wings and has been asked to vacate. The residents have now planned to approach advocates to make sure there is some way out of this situation.

Who is to blame?

It is surprising to know that IDEB and Parkway Venture could manage to construct seven wings, each consisting of about 13 floors without even obtaining the commencement certificate.

The BDA officials, interestingly have not even inspected the area to find out the discrepancies of the builders.

The builders who have been constructing the building from the past three years, as per the orders, have not only violated the BDA rules but have also separated about 1,710 sq m of area on the North West Corner from the main premises by constructing a compound wall.

The order also states that the entry to the premises from the north west side is blocked and the Set Back Line of 13 m is not maintained on the western side by changing the orientation and location of the basket ball court/tennis court. This modification has resulted in reduction of surface parking.

This is not all, while BDA had claimed ignorance all this while, even some of the major nationalised and private banks have sanctioned loans to almost 80 percent of the owners who have bought the flats.

“The banks have given loans to all of us without even checking? It’s ridiculous. For all these days we were only fighting for that land which has been taken to construct a hotel but now we have to fight for our own homes,” said a resident.

16 comments:

Anonymous said...

Once people start defaulting on these loans, banks would want to get out of bad loans by putting these flats at lower prices in the market. This liquidation process will bring down the prices substantially.

Lot of people will start defaulting if the interest rate is adjustable/variable or if people start losing jobs due to broader worldwide recession or maybe high inflation.

The Boss said...

This news implies fraud. Just because lot of builders are fraudulent doesn't automatically mean prices will come down. Actually, this explains why schemes by reputed builders get sold out so quickly and flats in these schemes become prized possessions seldom losing their values. There is no indication that a large number of people will default on their housing loans just because of rising rates. There will be hardships for all parties involved , but predictions of realty crash are way too premature at this time.

http://rightadvice4u.blogspot.com/

Anonymous said...

Near the end of a major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely. Deflation involves a substantial amount of involuntary debt liquidation because almost no one expects deflation before it starts.

Credit is credit, whether non-self-liquidating or self-liquidating. Deflation of non-self-liquidating credit usually produces the greater slumps.

Anonymous said...

The Keynesians say that lowering rates (and thereby expanding credit) always has a positive growth effect on the economy. So it seems likely that is what they will do. The question is whether they can expand credit fast enough to offset (and/or outlast) the change in lender/debtor psychology.

Another question, how can we measure that psychology and the confidence level (and trend of change) of the participants? Can we measure and predict those turning points where the confidence that debt will be repayed changes (either up or down)? Can we measure to what extent production (or lack of) is affecting debt service?

Anonymous said...

This is yet another reason property investing in India is quite tricky. Most property dealings are non-transparent, with no guarantee that a few years into the future, some violation or fraud will not be found. The amount of bribes given by builders to the politician-criminal nexus is substantial, and is ultimately passed on to the consumers in the form of inflated prices. This is why apartments in one of the poorest countries in the world cost almost as much as those in developed markets like the US.

Remember the boom of 1994-95 and the subsequent crash over 1998-2000? Property prices tumbled by almost half in that period. Investors like "the boss" got burned then, and no matter how much they wish otherwise, they are going to get burned again. Sorry.

Observer.

The Boss said...

These are some of the very lame excuses for the real estate crash:

Builders are crooked
Politicians and builders are in cahoots
Subprime debacle happened in US
Japan's real estate market collapsed in early 90's
There was a similar correction in 90s
I feel the prices are too high
But who can afford a house at these prices?
And finally, I can see bubbles whenever I see the skyline.

Anyone opposing these 'yet to be realized' crash theories is branded as builder lobby's agent or a

desperate investor trying to shore up prices. Hasn't worked so far!

http://rightadvice4u.blogspot.com

Anonymous said...

Springfields is one of the better complexes in Bangalore on Sarjapur road. If they can blatantly violate all BDA guidelines, what about the smaller builders. Sakarma or not, this builder needs to be nailed for his misdeeds. I'm suspecting that the builder has overbuilt and flouted all initial plans. How can a builder start building without a commencement certificate ? Is the land title free of all litigations ? This will raise the blood pressure of all the residents including the doctor quoted in the article. Also sales prices and rentals will dive now that this news is out. Who would want to be stuck with a lemon ? This is a warning sign to every buyer out there to do the homework. Even banks cannot be trusted. What a state of affairs !!!

Anonymous said...

Boss,
You'll repent when prices fall. You are still in la la land and not listening to advice from others. Just answer these these 2 and you'll get your answer:
1. Why are prices of builder stocks down 80% from their peak?
2. Why have rents not gone up corresponding to prices? If there is a real demand rents should shoot up but right now there is speculative demand.

I would suggest that you sell your assets now before it is too late. Keep your ego aside. You are lucky to see this boom in your lifetime and cash on it rather than trying to think it is permanent. Choice is yours as I don't gain anything by falling prices.

My suggestions are only for hard working middle class people to be careful as all their equity will get evaporated once the downfall start and keep in mind that the downfall is INEVITABLE.

Now, if you are a property dealer, you are in the business of fooling masses. You are doing right to earn your bread and butter but at least be ethical and have some moral values. One should learn from mistakes of other and should have a vision.

Anonymous said...

Who has actually written this article? the same article is found at http://bangalorebuzz.blogspot.com/2008/07/1300-residents-left-in-lurch.html
written by Chetana Belagere
and here Vik has written the same article.
Plagiarism rampant?

Anonymous said...

It is seen that pro-housing market correction people are using the same old arguments asking for low prices. It is clearly not working for them. Now they are absuing and using bad language against anybody not agreeing to them. Shows their desperate life without house. And now they are stealing news? The decent way is to show a URL and maybe cut and paste small sentences to support their foolish correction in prices argument. But this blog is almost all cut and paste and very little analysis. You can clearly see who the losers are ...

Anonymous said...

The article appeared in Deccan chronicle few days ago.

Anonymous said...

News of fraudulent builders need to be circulated to everyone so that they are not trapped with an asset with diminishing value. Information is key and deccan chronicle and this job are doing a good job in creating awareness. Unfortunately we cannot say the same about times of India which has become an advt paper for the builders. There are also good comments posted by Observer and others. my sympathies are with the Springfield residents.

Olduvai said...

Reputation is a tricky thing. I was seriously contemplating Sobha Magnolia in Blr three years back but backed out since that area was too noisy and crowded (opp. Sagar Apollo). Last week I drove past Banerghatta road and found the place still under construction. At that point, the builder salesperson had promised possession in mid-2007. It is about a year delayed and it did look atleast 6-12 months from being ready.

Also last week read about Sobha being downgraded. So much for schemes by reputed builders....

Anonymous said...

No matter what pro bubble bloggers say, the DOOM is coming. The more people buy in this time, the more they will lose. It is their money and their choices.

But the market will rebound back in 8-10 years and starting 2020 we may see these prices again. The prices that we see today are for 10-15 years ahead.

The more the people buy, the bigger the bubble will get and louder will be the pop.

Realty Rider said...

Booming markets invariably bring with it unsavory people, who try to make some quick money through dubious methods. This is more or less the state of India’s property market at this point of time. There are developers who sell the same piece of land to number of customers and there are those who sell land without clear titles or mandatory permissions from the authorities.
There are many fly-by-night operators and others in the unorganized sector who indulges in such fraud. So what should a buyer do? I would suggest buyers to investigate the background of any developer thoroughly. Believe me, if you are not careful, your life’s savings could be at risk.For more view- realtydigest.blogspot.com

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