Mumbai redevelopment: Builders stop paying rent, stall projects citing crunch

Redevelopment in Mumbai -whether of tenanted cessed buildings in the island city or housing societies in suburbs -has turned out to be a nightmare for several residents.

MUMBAI: Bombay high court Justice S J Kathawalla’s recent hard-hitting directives and observations against errant builders redeveloping housing societies will bring some succour to thousands of families, who have been stranded.

Redevelopment in Mumbai -whether of tenanted cessed buildings in the island city or housing societies in suburbs -has turned out to be a nightmare for several residents. Buildings are demolished and occupants are offered rents for alternate accommodation. But in case after case across the city has reported several of them), the developer stops paying rent and virtually abandons the projects, claiming financial difficulties or regulatory issues.

The present schemes of redevelopment necessitate involvement of the developer who makes windfall profits. On one side is the family which gets a free house while on the other are the builder and the buyer with unlimited resources. This makes the schemes fall prey to what is known in sociological research as typical predatory tendencies.

In cooperative housing societies, the builder manages to buy select office bearers and then conspires to delay the project, resulting in losses and ultimate eviction of most members.

According to an estimate, more than 5,000 projects are stuck due to frivolous reasons and where rents have been stopped, the condition is pathetic.

No wonder the high court finds it appalling that a substantial portion of its time is spent in hearing those adversely affected by redevelopment.

Housing activist Chandrashekhar Prabhu said a recent survey of redevelopment projects shows that most cooperative housing societies have witnessed office bearers selling their flats.

“When the redevelopment is completed, members find the office bearers responsible for ushering in builders getting extra area, better location, chosen direction, better specifications etcetera. When questioned, the standard replies are given indicating that extra money was paid. There is no way to check the records to prove that the special treatment was not free. An office bearer who runs a printing business was suddenly given printing orders for the builder’s balance sheets,” he said.

Special treatment is meted out to those who help builders usurp lands and buildings acquired by public agencies such as Mhada. TOI has learnt that in one such chawl, one of the supporters of such usurping bought six tenements at a price of one crore rupees each. “How can a person whose known source of income is from running a cable service make this kind of money?” asked a resident.

Anybody opposing is threatened, and sometimes even assaulted as happened in the case of one chief promoter, who refused to toe the line. All this has resulted in total distrust of the developer, his cronies and their methods. But a developer claimed they are sometimes blackmailed and coerced by some society members, who demand more money or “threaten to stall the project.”

Sudip Mullick, property expert and partner of law firm Khaitan & Co, said, “The developer must demonstrate his financial capability to execute a redevelopment project. The money that he receives from the free sale component must be put in an escrow account till he rehabilitates existing occupants.”

Source: http://realty.economictimes.indiatimes.com/news/residential/mumbai-redevelopment-builders-stop-paying-rent-stall-projects-citing-crunch/53989299

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