The Indian real estate sector is booming. As per IBEF’s report, the real estate market in India is expected to grow to INR 65,000 crore by 2040 from INR 12,000 crore in 2019. The report also predicted that by 2025, the real estate market will alone contribute to 13% of the country’s GDP.
Lately, Indian residential real estate is showing a trend of 5-year returns that indicates the haphazard growth in the market by replaced by more mature and realistic market behaviors. Backed by affordable housing and government sops, residential real estate is giving returns to the tune of 8 to 10% in the long-term, as per Morningstar.
The upward trajectory of the real estate market in India has pushed property developers to come up with a number of luxury housing projects, especially in the metro cities like, Kolkata, Mumbai, Delhi and Bengaluru.
However, just because projects are available, it doesn’t mean that people decide to buy an apartment every day. There are so many thousands of people who will never be capable of achieving the dream of owning a home. Purchasing a property involves massive financial commitment over a long period of time. Therefore, if you are planning to buy a 2 or 3 BHK apartment in Kolkata or Delhi, it is necessary for you to take proper precautions. Even though the Indian real estate market has customer-friendly regulations and rules, it is crucial for a homebuyer to be watchful. Property buying means the involvement of multiple parties and a lot of paperwork. You might be aware of RERA and otherwise more informed than before regarding property buying, but there are still certain risks and a lot of people fall prey to real estate frauds.
From legal frauds to Ponzi schemes, the real estate market offers a whole gamut of frauds and scams. Here is a rundown of the most common scams plaguing the real estate sector. Keep yourself updated and stay alert so that you do not become a victim of such scams.
Title scams happens with both property developers and individual sellers. There have been several cases where fraudsters have duplicated the title deeds of disputed or vacant projects and sold them to unsuspecting buyers. By the time the scam is detected, the scammer is already gone with the money.
Another related genre of real estate fraud is when the buyer has purchased a property only to know later that the project doesn’t include the part of the land that the developer had specified as theirs during the booking process.
One of the surefire ways to save yourself from such scams is by going for a property developer who is a member of CREDAI and has an impeccable record when it comes to project completion and delivery.
Deviating from the approved project plan
One of the major issues faced by homebuyers today is deviation from the approved layout. While a slight deviating is permissible as a result of unavoidable architectural or technical difficulties, a buyer must know that the limit is up to -5 or +5 percent of the approved plan. This is actually termed as an unintentional deviation and it is allowed.
However, if the deviation is more than the permitted limit, the project faces difficulty in getting the completion or the occupancy certificate. Furthermore, if the development authority does not approve of the deviation, the property builder will be under constant threat in terms of property demolition.
Therefore, a homebuyer should raise an alarm under such situations and also file a complaint against the property developer on account of unfair practices and forgery.
Thanks to the implementation of RERA, the number of projects that deviate from the original layout has reduced. However, it still does not hurt to be cautious. Also, know that if the developer has deviated, the homebuyer has the right to demand compensation from the builder. The compensation might even extend to a certain percentage of the cost of the project.
Project delays to force cancellations
A property developer might unnecessarily delay the completion of a project that was sold previously at low rates to force cancellations. This is done so that the developer can re-sell them at a much higher rates. This might also happen if the buyer pays delayed installments.
Section 11 (5) of the RERA states clearly that even though a property developer has every right to cancel the agreement, it has to be done in accordance with the clauses and terms as stipulated in the sale agreement. Furthermore, the Act also states that the allottee might approach the authority seeking relief in case he/she is not happy with the cancellation.
The scheme of bait and switch
Bait and switch is a deceptive or fraudulent sales practice wherein the homebuyer is lured by an advertisement involving an affordable property, but is then encouraged to put his/her money in a property that is priced much higher than what has shown in the advertisement. The complaints associated with this scheme are mostly related to homes that are advertised for sale or rent, but are found to be off-market after the agent is contacted. This type of listings are seen to be floating around the Internet for a very long time, even after the actual property has been sold. Thorough due diligence is required to protect yourself from such fraudulent home-buying process. Make sure to keep a watchful eye on such questionable listings in the online landscape. To avoid being scammed when buying your dream home, make sure to check the property developer thoroughly. Check the track record and reputation of the property developer, go through the details of the project, such as the ownership details and do not hesitate to clear any doubts that you might be having before investing your money.