Homebuyers’ association calls for real estate guidelines under Consumer Protection Act: Report

In view of rising fraud in property purchases, India's homebuyers' body has urged the Central government to issue real estate sector guidelines under the Consumer Protection Act, 2019.

According to a report by The Economic Times, the Forum for People’s Collective Efforts (FPCE) has cited government statistics in its letter to the Ministry of Consumer Affairs. As per the letter, Consumer Affairs Minister BL Verma, in Lok Sabha, underscored that real estate-related complaints make up around 10% of the total cases lodged with consumer forums. Additionally, more than 50,000 complaints from homebuyers were pending across consumer forums as of end of July. Abhay Upadhyay, the FPCE President, told ET that homebuyers need protection from unethical practices such as misleading advertisements, unfair practices, and lack of tranparenct, given that many consumers invest their life savings in purchasing a property.

'Misleading property ads'

The association highlighted the issue of misleading advertisements, wherein developers exaggerate the features of properties. Upadhyay noted that some fraudelent developers promise amenities that are missing or not part of the approved plans, and buyers only realize the discrepancies after signing the Agreement for Sale (AFS) or taking possession.

'Other malpractices'

FPCE also expressed concern regarding the demand for full payment upon possession, even when common areas, facilities, and amenities remain incomplete.

In addition, the FPCE President raised concerns about project delays, which lead to financial distress for buyers. The demand for a 10 percent fee before signing the AFS was another concern highlighted by Upadhyay, who said such contracts are biased, as they include one-sided clauses that penalize homebuyers but not developers. The association has urged the Consumer Affairs Ministry to mandate that developers refund the full amount within 15 days if cancellation occurs within 3 months. "For cancellations after 3 months, the refund should be made within one month, with savings bank interest applied from the date of booking and installments received," Upadhyay told ET.

The association has also raised concerns about the inflated carpet area measurements, where developers charge buyers for additional space based on self-certification by their own architect. FPCE argued that such practices result in higher charges for additional space they did not agree to purchase. Another concerning practice cited by FPCE involves developers altering project plans without buyers' knowledge or consent.

Upadhyay also homebuyers' struggle continues even after possession. He said homebuyers are unable to secure clear property titles, even after taking possession, due to outstanding dues between developers and local authorities.

He said the homebuyers’ association is urging to implement guidelines in the Consumers Protection Act to ensure developers clear all statutory dues before the handover of properties. While the Real Estate (Regulation and Development) Act (RERA) was enacted in 2016 to address some of these issues, the homebuyers' body argues that it has fallen short of achieving its intended objectives.