In NCR, Flats change hands twice before possession

From booking to possession, a flat is sold twice in NCR

GURGAON: From the time of inviting bookings for a flat to the stage where the developer gives the final possession, a dwelling unit changes on an average two owners in the NCR, claimed property gurus. Ashutosh Limaye, local director, strategic consulting, Jones Lang LaSalle, India, explained: If we consider the legitimate deals, approximately 25 per cent buyers are actually investors. Though there are no specific data available, out of these, close to 25 per cent investors are those who do it for a short term while the rest wait to get  possession. Also, there might be cases where developers offer to buy their units back when the market is on a positive curve. This kind of change of ownership could also mean some fee paid to the developer, though not known formally.

According to property experts, such multiple selling of flats only means an indirect loss for the developers since they might simply launch their projects at a higher price than letting investors benefit from them. A DLF spokesperson confirmed the trend saying that when the real estate market had a slump during the end of 2008, they had introduced two mandates as a matter of policy to keep investors and speculators off.
To encourage genuine buyers to book property, DLF Ltd had introduced one PAN one flat policy and also a lock-in period of minimum one year for all its projects after 2008, explained the spokesperson. When asked whether the developers charged for such transfers, the official said he was unaware of any such clause but did not completely deny it. The DLF official also added that despite their best efforts, the measures might not be fool-proof to completely block investors.
According to Sanjay Sharma, managing director, QuBREX, most of these cases of investors buying apartments are prevalent in projects
announced by developers in places comparatively far from the main city in the NCR.
The time taken for completion also plays a major role in deciding the nature of buyer. It is the investors who actually take the risk of putting their money in such far-fetched projects, away from the main city. As many as 65 per cent of those who make bookings in post-projects are investors and not end-users. Before the final possession is given, the units are, on an
average, sold twice over, explained Sharma.
Added Vikas Arora of Gauransh Associates, and an ex-employee with several top developers in the NCR: Close to two-thirds of those who book in a housing project are investors who sell their properties after may be paying the booking amount while only one-third are actual buyers who take possession.
The trend is not only in private projects but also visible in the government ones, asserted deputy commissioner of Gurgaon, Rajender Kataria. HUDA permits three re-sales before the actual possession. It charges a transfer fee and the tentative ownership is transferred. This is an illegal practice under the Transfer of Property Act. The state ex-chequer also loses stamp duty and registration fees on all such transfers, Kataria explained.