Time and again, consumer organizations have warned against purchasing an under-construction property. This advice is all the more pertinent today because delayed housing projects are an unfortunate reality.

Vinod Sampat, president of Cooperative Societies' Residents, Users and Welfare Association, says, "In such a situation, the consumer is literally helpless, especially if he has paid a certain portion in cash. But for the white component at least, he can file for deficiency in service on the builder's part in a consumer court.''

For now, a consumer court is the only redressal recourse in real estate disputes of delayed possession, quality of construction, and such others. That's because, despite several representations from consumer groups, the critical sector continues to languish without a single-point regulator. (Things are a lot different in the developed world. Builders in the UK, for instance, even offer a 10-year warranty and insurance cover on property, says consumer activist Arvind Shenoy.) Since housing is a state subject, each state frames its own policies. As an official in the ministry of urban affairs says, "It is (to be) dealt with by the concerned state governments.'' Bejon Misra of Delhi's Consumer Voice, however, insists there is an urgent need at the Central government level to bring in a strong redressal mechanism for the sector. "This has not happened despite promises from the government.''

A step in this direction was taken by the Maharashtra government earlier this year with the proposed Maharashtra Housing Sector Regulatory Commission Act 2008, which stipulates formation of a dispute redressal committee. However, it is yet to be passed. Currently, Maharashtra has the Maharashtra Ownership Flats Act, 1963. It mandates a builder to provide 9% interest on total amount paid for the flat in case of delay, says consumer activist Jehangir Gai.

Then, Gujarat has its Gujarat Ownership Flats Act, 1973. Not all states, though, have such laws to guide consumers. The National Capital Region (metropolis areas around New Delhi) does not have one, says D L Desai of Builders' Association of India. At an individual level, most property buyers remain reluctant to move consumer courts over a dispute. Like, this Mumbai resident who has been waiting for a year-and-a-half to take possession of his flat—without being offered any compensation. As reported earlier in this column, a delayed housing project is a financial strain in other ways too. The Mumbai consumer, for instance, continues to shell out EMIs (equated monthly installment) on his home loan even as he pays rent on his temporary accommodation.

And, as he is not in possession of the flat, he is not entitled to income-tax rebate under Section 24 (ii) of the Income-Tax Act, 1961. Certified financial planner D S u n d a r a r a j a n , though, says that after securing possession, the interest portion on the loan paid before possession gets adjusted over the next five years, subject to a limit of Rs 1.5 lakh. If a property is in a joint name, both holders are entitled to the amount, which works out to Rs 3 lakh.

Courtesy:- TOI dtd:- 14^th Nov 2008