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Buying an own house is a dream project for any individual. Having space for one’s ownself is something anybody would yearn for. Realtors in Hyderabad are trying to cash in on the same aspiration by announcing pre-launch offers.
There is buzz that realtors in Hyderabad are selling nearly 4 crore sft in a Rs 30,000-crore scam through pre-launch schemes.
The transactions under the pre-launch business do not appear to be unlawful but they put the investors’ money at risk.
The pre-launch offers of any real estate venture depend on either the MoUs or UDS which give no legal guarantee to the buyer’s financial investment.
In the Memorandum of Understanding (MoU), the buyer is shown as a person who had agreed to give loan to the seller to enable him buy land and in return the buyer is promised a flat in the same area. However, the rules are not strict with regard to completion of the venture or readying the flat for occupying, which means the customer does not have any assurance regarding owning the flat. The MoU type of transaction is mainly based on the trust of the buyer upon the seller.
However, the buyer is made to shell out money in conformation with the rules set by the realtor. A majority of the pre-launch offers go by speculation, projecting immense development at the place where the venture is planned. The buyer is made to believe that some connecting road or another big venture near the venture would spur development in leaps and bounds in the particular place where the buyer is investing.
No RERA approval
A majority of the real estate ventures going for pre-launch offers do not have Real Estate Regulatory Authority (RERA) approval which put the money of the buyer at risk and also cause loss in crores of rupees to the state exchequer. Pre-launch projects facilitate the realtors to evade paying GST of 5% and 6% stamp duty to th government.
These ventures bear tags like ‘low investment-high profit’. They try to make the customers believe and trust them that they would be given flats at very cheap prices in prime areas of the city.
In the Undivided Share (UDS) type of deal, the customer is made the owner of the land. The UDS document projects a few customers forming into a group and buying the land, which is handed over to a builder (realtor) for developing it.
In this type of transaction, there is risk for the customer itself to be prosecuted in the court of law, in case of any irregularity.
There are over 800 realtors in Greater Hyderabad, a city spread in 625 sq km. Those offering pre-launch offers quote cheap rates per sft like Rs 3,600-Rs 4,000 per sft close to the main road in LB Nagar. This real estate project alone is estimated to be doing a business worth Rs 2,000 crore.
Real estate bubble
Significantly, all these real estate transactions are being done in the open market in full view of RERA and HMDA but there is no one taking action on these realtors.
It is being feared that this unscrupulous elements could lead to dooming of the realty sector in Hyderabad. Once the demand-supply formula goes for a toss, it is feared that National Captial Region-like scene in Delhi might repeat in Hyderabad.
In Delhi’s NCR too, pre-launch offers worth Rs 2 lakh crore were made to the customers but many of them either did not take off or were not completed in the given time leading to an unprecedented crisis.
Telangana Credai is worried that a similar situation is likely to occur in Hyderabad and that thousands of customers are likely to be deceived.
The pre-launch business is more like the multi-level marketing scam which would harm the people in the long run and customers, it is feared, would eventually lose trust in realtors due to such arm-twisting tactics.
Tags Hyderabad Apartments Hyderabad Real Estate Pre Launch Sale Hyderabad
