Why are housing projects delayed? Industry, buyer groups hope to have answers soon
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Why are housing projects delayed? Industry, buyer groups hope to have answers soon

Assocham and a group called Fight for RERA are independently gathering data, inviting buyer input.

real estate Updated: May 06, 2017 21:13 IST
Lavina Mulchandani
Lavina Mulchandani
Hindustan Times
Real-estate,Delay,Residential project
((Illustration: Shrikrishna Patkar))

The numbers are startling, and it’s not always the builder’s fault. Take Monish Chandan, 31, a financial consultant from Mulund who invested in Runwal Infinity 9 years ago. “When I booked the flat, the project was half done,” he says. “I’ve paid 80% of the flat cost and I still haven’t got possession.”

Construction of the project stalled last year because of a Supreme Court order stating that it was being built on forest land.

“The land later got clearance from the Supreme Court, but the government took almost a year to recognise and implement that. Meanwhile, all existing approvals lapsed and we now have to apply for them all over again,” says a spokesperson for Runwal. “We expect it to be at least another six months before we resume construction.”

It’s no wonder then that a study released this month by Assocham (the Associated Chambers of Commerce & Industry in India) revealed that 826 housing projects are running behind schedule across 14 states as of December 2016. And those are only among projects that had passed the launch stage.

“We have mapped delays across real-estate hubs such as Maharashtra, Gujarat, Karnataka and Haryana,” says ASSOCHAM secretary DS Rawat. “For the purpose of our study, we have considered only projects where bookings had opened, and we have defined the term delay as a month or more after the date of delivery promised.”

The study suggests that the average delay is 39 months in Maharashtra, 48 months in Punjab and 31 months in Karnataka.

“Nearly 95% of the delayed projects are residential,” says Rawat. “Our analysis suggests that public and the private sector projects have almost similar kinds of delays.”


Most delays are a result of red-tapism, changing norms, a cash crunch or all three. Meanwhile, buyers get stuck in no-man’s land, as happened with software engineer Rajeev Khatib, 28.

He is currently paying a loan on a house that already 8 months late, and also paying rent for the flat he still lives in in Malad. “I booked the flat in Kharghar 18 months ago, and the project was half complete then,” he says. “Construction suddenly stopped a few months ago. The builder says he is facing a funds crunch.”

An association of flat buyers is now conducting a study on project delays too. The group is called Fight for RERA and they are hoping that their survey will help push the government to act once the Real Estate Regulatory Authority (RERA) Act, which was passed last month, is implemented across the country in May.

The Act stipulates stern penalties for builders in case of delays, and allows buyers to exit a delayed project if they choose. “We will present the data to central government expecting an action,” says Abhay Upadhyay, member of Fight for RERA and convener of the study.

Another way RERA could potentially help is by finally creating single-window clearance for real-estate. As industry bodies have repeatedly said, any answer would be better than the void into which many applications currently disappear for months at a time.

“Even if the answer is no, getting a response will help divert funds and investments in other direction,” says Nitin Bhatia, an independent consultant from Bengaluru.

“Currently, obtaining mandatory approvals from multiple regulators and authorities is time-consuming and expensive. In many cases, the developer also has to keep following up with authorities to know at which stage his is file stuck,” says Siddharth Goel, senior director of research services at realty consultancy Cushman & Wakefield India.


In addition to the stern stipulations on delays, RERA also lays down the law on diverting of funds, which currently contributes to delays. “In the current scenario, builders use advance payments received for one project to buy land and begin another, hence the first one may get delayed if sales stall,” says Ramesh Nair, CEO and country head at realty consultancy JLL India.

As an effective solution, centre and state governments must introduce a single-window system for clearance of all real-estate projects and strictly implement the realty regulation law, says Rawat of ASSOCHAM.

(If you would like to register a project you have booked a flat in as delayed, go to bit.ly/2opCFbY)

First Published: Apr 22, 2017 21:41 IST