The Supreme Court of India has voiced strong concerns regarding the plight of middle-class homebuyers whose dreams of owning a home have been shattered by stalled housing projects. Observing their disheartening situation, where their "dream home" has been reduced to a distant reality, the court has emphasized the need for government intervention through the infusion of funds to revive these projects and protect the interests of the buyers.
The court's directive comes amidst a backdrop of increasing frustration and legal battles waged by homebuyers against builders and financial institutions. Many homebuyers find themselves trapped in a complex web of delayed projects, unpaid loans, and alleged collusion between builders and banks. Instances have emerged where banks have disbursed the entire loan amount to builders despite the project being far from complete, leaving homebuyers with the burden of repayment for properties that are either unfinished or non-existent.
Several factors contribute to the stalling of housing projects, including: * Diversion of Funds: Builders pocketing homebuyers' funds and loan funds. * Builder-Banker Nexus: Allegations of an "unholy nexus" between builders and banks, where loans were disbursed without proper due diligence, ignoring regulatory guidelines. * Non-compliance with RERA: Builders not adhering to the Real Estate (Regulation and Development) Act (RERA) provisions, particularly the requirement of maintaining a separate escrow account for project funds.
The Real Estate (Regulation and Development) Act (RERA) mandates that builders create a separate escrow account to maintain 70% of funds received from homebuyers, solely for the construction of the project. Withdrawals from this account are to be proportionate to the percentage of project completion. However, allegations of non-compliance with these provisions have surfaced, further jeopardizing the interests of homebuyers.
To address this crisis, experts suggest a multi-pronged approach involving sacrifices from all stakeholders. This includes lenders offering interest rebates, authorities granting higher Floor Area Ratio (FAR) or waiving dues, and homebuyers contributing additional funds. Restoring diverted funds to the stalled projects is also crucial.
The Supreme Court's intervention underscores the urgency of the situation and the need for a coordinated effort to resolve the crisis in the housing sector. The government's role in infusing funds is seen as a critical step towards reviving stalled projects, protecting homebuyers' investments, and restoring confidence in the real estate market. It remains to be seen how the government will respond to the court's directive and what specific measures will be implemented to address the challenges facing the housing sector and its stakeholders.
