Can a project that was granted a single licence be split into phases without being unfair to existing buyers? Can completed phases be delinked from newer ones, which can then be redesigned without the approval of existing allottees?
These issues were first discussed at the Urban Development Conclave in February, where KK Khandelwal, Chairman, Gurugram Real Estate Regulatory Authority (RERA), raised the issue of the difficulty in getting the consent of two-thirds of the allottees for any changes in the design of unbuilt phases. Three RERA chairmen — from Gujarat, Uttarakhand, and Rajasthan — indicated that the problem was solved in their states by breaking the project into phases.
Why Redesign?
The bigger issue is why does a project have to be redesigned after RERA registration? The first reason is that with new policies such as transit oriented development (ToD), extra floor area ratio (FAR) is offered to developers building along these corridors. Also, there is extra built-up area available by way of transfer of development rights (TDR), which a developer can utilise on this project, if the supporting infrastructure is available. A third reason why designs need to be changed is because of rapid changes in consumer preferences, necessitating changes to make the project more saleable in the present scenario.
Going by past experience, these design changes have been detrimental to those already residing in the vicinity. The prime example is that of the Supertech twin towers that were demolished on August 28 by a Supreme Court order because they violated the minimum setback principles from existing towers, thus spoiling their environment, and ambience.
Two-Third Consent
In Haryana, a new proposed policy was uploaded, without much fanfare, by the Department of Town and Country Planning (DTCP) for suggestions from consumers on the draft notification issued on July 18. A policy for allowing phasing in licensed colonies and seeking consent from two-third of the allottees in case of revision in the layout plan/building plan for co-ordinated functioning of statutory authorities has in-principle been approved by the state government. The co-ordination was under the Haryana Development and Regulation of Urban Areas Act 1975; the Real Estate (Regulation and Development) Act 2016, and the Haryana Apartment Ownership Act 1983. It rests upon a January 25, 2021, notification by the DTCP.
The constitutional validity of this policy has been challenged in the Punjab and Haryana High Court.
The proposed policy applies to parts of projects in licensed colonies, which are yet to be registered with the RERA. The first objection by consumer bodies is to the clause, “An undertaking from the coloniser regarding such non-registration of the colony or such part of it shall be considered adequate along with such disclosure.” Consumer bodies say that this is in violation of the protection they receive under Section 14 of the RERA Act which mandates approval by two-thirds of existing allottees before any revision in the plan can be allowed. The policy seeks to redefine what amounts to revision of plans and which revision will require previous written consent of two-thirds of the allottees.
Short-Changing Buyers
So, what can happen when this proviso is enacted? Without any stipulation on the size or composition of each phase, consumers fear that a few completed towers would be converted into a completed phase, and they may lose their right to protest against injustice. While the entire colony was planned as a whole and complement each other in services, it is quite possible that the developer may place the sewage or garbage treatment facility close to the old, completed phase, and they may never be able to protest as they are part of a completed phase.
Also, if the developer consolidates a few extra acres adjoining the boundaries of the existing layout, they may well take the remaining land from the existing project(s) and turn that into a new phase/project. With greater FAR allowed because of the ToD policy and some TDR purchased from other developers, the new phase can be made premium, and viable.
However, it might infringe on the rights of the existing completed phases in terms of club house or other facilities, making those crowded and less premium. For instance, a Gurugram-based developer used the space for amenities to build another tower at the cost of promised amenities, by arbitrarily revising plans for the low-rise economically weaker section wing to a high-rise tower.
Problem Clause
There are parts of the notification which consumers are interpreting as developer-friendly. For instance, the one-sided developer-led disclosure clause quoted above seems to violate the rights of the consumer (home buyer). A simple disclosure by the coloniser (developer) to the authority, without any clause of intimation to existing consumers seems to reek of collusion. In an ideal world, the safeguard of RERA approval to the final plan seems all right, but with the lack of trust in the market, consumers are still wary.
The clause in the proposed amendment that a phase can be deemed complete with essential services, seems misleading as essential services have not been spelled out. Without that, developers do not have to follow any benchmark in minimum services.
Future projects can be planned in phases with clear announcement of services and facilities in each phase. The marketing then should also be in accordance with that. Consumers of the phase can then complain to RERA if the promised facilities are not provided. However, for legacy projects that have been planned and executed as single entities with common areas being shared across the project, phasing is a tricky business that can lead to consumers being short-changed.
E Jayashree Kurup is a writer-researcher, and Director, Wordmeister Real Estate & Cities. Views are personal, and do not represent the stand of this publication.
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