Karnataka Struggles to Recover ₹627 Crore from Delayed Real Estate Projects, Recovers Only 12% So Far
The ongoing struggle to recover funds owed to homebuyers from delayed real estate projects in Karnataka is proving to be a major challenge. According to a document accessed by Moneycontrol, developers in the state owe over ₹627 crore in refunds, a figure that highlights the significant financial strain on buyers. However, as of August 2024, the Karnataka Real Estate Regulatory Authority (KRERA) has managed to recover just ₹79.9 crore, which amounts to only 12.5% of the total money pending.
Real Estate Crisis in Karnataka
The real estate market in Karnataka, particularly in Bengaluru, has been grappling with a growing number of delayed projects. These delays not only impact the developers but have also left many homebuyers in a difficult financial position. Bengaluru alone has over 26,030 delayed real estate projects, with a combined worth of ₹28,072 crore, which are running behind schedule. The state of these projects has raised concerns about the real estate sector’s ability to meet its deadlines and deliver homes to buyers as promised.
The Real Estate (Regulation and Development) Act (RERA) was introduced in 2016 to bring transparency, accountability, and efficiency to the real estate sector. The law mandates that if a developer fails to deliver the project or compensate homebuyers for the delay, the regulatory authority has the power to issue a revenue recovery certificate (RRC). The RRC directs the state’s revenue department to recover the money owed to the buyers.
Despite the provisions of the RERA, the execution of these recovery measures has been slow. The ₹79.9 crore recovered as of August 2024 represents just 12.5% of the ₹627 crore owed by developers. This amount includes 185 cases filed at KRERA for recovery, amidst a total of 1,354 cases that have been filed. The slow pace of recovery has left many homebuyers frustrated, as they continue to wait for refunds and compensation for projects that have failed to meet deadlines.
Key Issues with Recovery
The primary challenge facing homebuyers is the inefficiency in recovering funds from developers. The process of issuing RRCs and the subsequent steps taken by the revenue department have been slow, contributing to the delayed recovery of funds. While the regulatory framework exists to protect buyers, its implementation has been uneven, leaving many homebuyers in the lurch.
The listed developers in Karnataka owe over ₹16.3 crore, which accounts for about 2.5% of the total money pending for recovery. These delays and non-payments have caused significant financial strain on buyers, many of whom have invested their savings in these projects. The delay in the recovery process exacerbates their plight, as they are left without either their homes or their money.
The Role of KRERA
The Karnataka Real Estate Regulatory Authority has been at the forefront of addressing the concerns of homebuyers. It has worked to ensure that developers adhere to the timelines and commitments made at the time of purchase. However, despite its efforts, the authority has been unable to expedite the recovery process significantly.
The former KRERA Chairman, Kishore Chandra, had previously suggested that homebuyers could take over and complete delayed projects themselves. This was proposed as an alternative to waiting indefinitely for the developers to act. However, this approach comes with its own set of challenges, including the need for substantial financial and logistical resources. Additionally, many homebuyers are hesitant to take on the responsibility of completing large-scale projects.
Delays in Bengaluru Real Estate Projects
The issue of delayed projects is particularly acute in Bengaluru, where over 26,030 projects have missed their completion deadlines. These delayed projects, worth more than ₹28,072 crore, have left a large number of buyers in financial distress. Many homebuyers in the city are either paying rent while also servicing home loans or are stuck in legal battles with developers over delayed possession.
The situation has not only impacted the buyers but has also tarnished the reputation of developers and the real estate sector in Bengaluru. Developers are now facing increased scrutiny from both the regulatory authorities and the public, as the number of delayed projects continues to rise.
Looking Forward
The Karnataka government, along with KRERA, is tasked with finding a solution to the issue of delayed real estate projects and the recovery of pending dues. While the recovery of ₹79.9 crore is a step forward, it is clear that much more needs to be done to ensure that homebuyers receive their rightful refunds.
The real estate sector in Karnataka, particularly in Bengaluru, remains a vital part of the state's economy. However, the growing number of delayed projects and the slow recovery process have caused significant frustration among buyers. The government and KRERA will need to work together to streamline the recovery process and ensure that developers are held accountable for their commitments.
The introduction of stricter penalties for non-compliance with RERA provisions, as well as faster execution of recovery certificates, could help improve the situation. Additionally, ensuring that homebuyers have more direct involvement in project completion could offer a viable alternative to waiting for developers to act.
