How builders cheat you of your dream home

Published: Nov 02, 2012, 06:30 IST | Varun Singh |

Going against MCHI's own code of conduct, prominent builders at exhibition were seen fooling customers by quoting rates according to super built-up instead of carpet area.

Of the 120 builders showcasing their properties at the MCHI-CREDAI exhibition yesterday, not more than a dozen were selling flats on the basis of carpet area. According to MCHI’s own code of conduct, a builder should disclose the carpet area to the flat buyer.

Picture for representation

Instead, an overwhelming majority of builders at the exhibition organised at the Bandra Kurla Complex by MCHI-CREDAI — a representative body of real estate developers — were selling on the basis of “saleable” area, which includes built-up and super built-up area.

Takes up a real visit: Shikha Sharma of Axis Bank visits the MCHI-CREDAI exhibition at Bandra Kurla Complex yesterday. She was welcomed by Sukhraj Nahar (extreme left) of Nahar Group, Dharmesh Jain (centre) of Nirmal group and Bandish Ajmera

Builders like the Ajmera Group, Hiranandani, Lodha and many other reputable players in the real estate industry were found sticking to saleable.

The chairperson of the Exhibition Committee of MCHI-CREDAI is Bandish Ajmera. His uncle, Rajni Ajmera, has been the president of MCHI. Niranjan Hiranandani, too, has held the post of president of MCHI in the past.

Representatives at the stalls, when asked whether they were selling on saleable or carpet basis, were prompt to reply: “Saleable.” One even said, “…Else, how will a builder make profit.”

In the sea of saleable, there were a few swimming against the tide. One of them was the president of MCHI, Paras Gundecha, who was selling his flats on the basis of carpet area. Like him, Rustomjee also talked carpet while quoting its prices.

In September 2011, MCHI had come out with code of conduct, which specified that a builder had to clearly state the carpet area to the purchaser (‘Now Code of Conduct to Govern Builders’, MiD DAY, September 16, 2011).

The exhibition, where a written sign loudly proclaimed ‘MCHI hai toh bharosa hai’, saw most builders not following the code and selling flats on the basis of saleable area only.

On the question of why the code was not being followed, builders said the carpet area concept would take some time to settle in as a trend.

“On the positive side, there are builders who are talking about carpet area at the exhibition,” Bandish Ajmera said. “It will take some time; already within a few months builders have started talking to customers using carpet area rates. I am sure in the coming days all builders will disclose to customers the carpet area. Whenever a buyer asks for the carpet area, we do tell him the same.”

Ajmera said as the paperwork always involved carpet area, the customer was not kept in the dark about it.

“At the end of the deal, every flat is registered on the carpet area, the stamp duty and registration fees are paid on the carpet area, and thus the homebuyer automatically becomes aware of the carpet area,” he said. Niranjan Hiranandani of the Hiranandani Group said: “All our deals on paper are only on carpet, however it’s the customers who want to know the saleable area along with carpet, and hence we tell them both.”

S Karthik of Lodha claimed that none of his projects were sold on saleable, but when informed about what was happening at the exhibition stall, he said: “I will have to check on this.”

Another builder, who spoke on the condition of anonymity, said: “It’s the customers who want to know the super built-up rate, so we tell them the saleable area. Anyway, there’s not much difference between the saleable and carpet area prices. The builder divides the total sale amount with the carpet area when he sells on carpet area basis and with saleable when he sells on super built-up. For example, if a builder is selling an apartment of 500 sq ft carpet at the rate of Rs 1 crore, the rate would be Rs 20,000 per sq ft. If he sells the same on saleable basis, the area would go up to 800 sq ft and the rate would come down to Rs 12,500 per sq ft.”

Disappointed visitors
Prospective homebuyers at the exhibition complained that most builders showed them flats that they were selling only on saleable area basis.
R G Gulati, who came looking for an affordable home, said: “Every time I come, the flat prices are high. This time, every builder showed us flats only on saleable. Why would a builder sell to us a flat on carpet area when he’s selling everyone on saleable? Why would he make arrangements for me alone?”

Another home-seeker, who did not wish to be named, said: “We know the final price won’t differ irrespective of whether the builder sells the flat on carpet or saleable area basis. But when the builder discloses the carpet rate, we at least know at what rate we are getting the home and how much area we will get to use.”

Minister speaks
Minister of State for Housing Sachin Ahir said: “It’s high time that the BMC and the revenue department start the process that we have asked them to.

Minister of State for Housing Sachin Ahir

We are trying to ensure that the BMC passed building plans only on carpet area, and the stamp duty department should register flats only when it sees the passed carpet area plan. The customer also should now ask the builder for sale only on the basis of carpet area.” 

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