The Real Estate (Regulation and Development) Act, 2016, demonetisation and a number of policy reforms were expected to instill confidence in the minds of homebuyers. But despite these initiatives, little seems to have changed on the ground. Defaults and unmet promises are more a norm than exception in the Indian housing market.
The success of any given industry is measured by the C-SAT (Consumer Satisfaction) Score, and the business of real estate is no different. The C-SAT Score of Indian real estate is as low as 18. Surprisingly, 10 years ago, it ruled marginally higher at 21.2.
The low C-SAT Score of Indian real estate players is in contrast to the mature property markets of the world, where it rules around 60. The low C-SAT score is also an alarm bell for a housing market where the unsold housing inventory is a cause of concern.
A defect-free house and timely possession are luxuries that only a handful — as few as 14 percent — homebuyers have been able to enjoy. C-SAT score is the most scientific way to assess the performance of a given real estate company. It is broadly measured through the buyers’ satisfaction with the given product, and the intention to become repeat buyers with the same developer, and/or act as a referral buyer to friends and family.
While the buyers’ C-SAT score rules at 18, a lesser number would venture to become repeat buyers with the same builder. Only 12 percent Indians would buy the next property from the same builder. The C-SAT score is highest in Pune, at 34, and the lowest in Noida, at an abysmal 6.
According to a study, project delays, defaults and hidden cost of housing are pain points for a vast majority of homebuyers. More than eight out of 10 homebuyers, as many as 82 percent, have some regret about the home-buying decision. More than half, that is, as many as 54 percent, find a rental house far less troublesome than a house of one’s own.
These are the findings of a pan-India survey by Track2Realty. Track2Realty conducted this survey to assess the C-SAT Score post the reforms that were supposed to bring tangible changes on ground for the homebuyers. The survey was conducted in 10 cities – Delhi, Noida, Gurugram, Ghaziabad, Ahmedabad, Kolkata, Bengaluru, Hyderabad, Chennai and Coimbatore.
How to assess your C-SAT?
1. Will you buy the next house from the same builder?
2. Are you satisfied with the product that has been delivered?
3. Have timeline and other promises related to the house been met?
4. Will you refer the builder to friends and family?
5. Have the builder’s employees been responsive during and after the sale?
The survey looked into five key areas — homebuyers’ satisfaction; trust index; promise and performance; delivery cycle hassles; and post-possession realities. Post-possession consumer feedback could probably give a facelift to the builder’s credentials and help score a higher C-SAT. Unfortunately, the post-possession hassles are among the key turn-offs for as many as 72 percent buyers.
The study noted that the vast majority of Indians, 58 percent to be precise, reported more hassles during handover than during the endless wait for project delivery. Customer service during the construction lifecycle was reported to be thoroughly unprofessional by no less than 74 percent homebuyers.
Eighty percent homebuyers reported no response by the developers on the extended timelines. “As a pregnant woman, I had more anxious visits to the developer’s project site than to the hospital. This is the agony of the middle-class homebuyers after having invested their hard-earned money,” says Pramlata, a homebuyer in Ghaziabad.
Forty-six percent complained of hidden charges and coercion to pay more money under one pretext or the other. “If my cheque was not deposited on time by the marketing staff of the builder, then how am I responsible for that? But the builder forced me to pay a delay penalty at the rate of 24 percent for their own fault,” rues Rajkamal, a software engineer in Noida.
Eighty-eight percent homebuyers complain the developers are still selling on Super Area and not Carpet Area, something that is illegal. Thirty-four percent have even been coerced by the builder to sign the pre-dated consent on the future layout and FAR changes. “I was categorically told to either sign the advance consent letter or else wait for possession till other homebuyers sign it. Now, under the burden of both the rent and the EMI, I had no choice but to surrender. I don’t have the bandwidth to fight the builder in a long and expensive legal battle,” complains Rakshit Desai, a marketing professional in Mumbai.
More than two-third Indians, that is, as many as 68 percent, categorically maintain that they wish to drag the builder to court. But the lengthy and expensive legal battle is a deterrent. Has RERA given the homebuyers some respite? Not really. Seventy percent Indians think RERA is just another window of litigation and the builders don’t comply with RERA orders.
Unfair contract is cited by 82 percent Indians as the root cause of malice in the Indian real estate market. Seventy percent homebuyers allege they get to see the Builder Buyer Agreement only when they have already made the initial payment.
“This is like a chicken and egg syndrome of the Indian housing market. Most of the homebuyers don’t come forward to challenge the unfair contract, and hence, the builders get away with this. In rare cases when the buyer challenges the builder under the Consumer Protection Act, then the builder harasses him with lengthy litigation,” admits Advocate Nirmit Srivastav.
The builders’ in-house facility management is a real bone of contention for a vast majority of Indians. Sixty-two percent believe the developers’ greed to pocket money with facility management should be stopped by law. As many as 84 percent homebuyers believe a professionally hired facility management agency is the need of the hour to settle the teething issues during and after possession.
Most homebuyers, 92 percent to be precise, have not even heard of developers measuring up to their satisfaction level. A vast majority of them, as many as 68 percent, have never been approached by the builder or his team once the property has been handed over to them.
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