As per ICRA’s estimates, the total housing credit outstanding in India as on March 31, 2016 was around Rs 12.5 trillion as against Rs 10.5 trillion as on March 31, 2015, indicating an annualised growth of 19% in FY16.
The housing credit growth was witnessed by both banks and Housing Finance Companies (HFCs). Growth in HFCs was further characterised by small entrants in the segment. They were focused on financing affordable housing schemes, and tapping self- employed and new borrowers. Buying home was also being considered actively in Tier II/III cities.
With the Government also laying focus on the affordable housing segment, HFCs have largely focused to provide loan access in rural and semi-urban areas. These areas are usually underbanked and presented a ready opportunity. A wide-spread population base supplemented by growth in income and rapid urbanisation; pushed the consumer home loan segment. This lucrative market also attracted large housing corporations.
New borrowers were charged a low interest rate. They were also offered incentives like low processing charges. In addition, there were no prepayment penalties attached. Targeted campaigns were launched to induce the tech-savvy generation between the age group of 18-25 years.
Perspective on real estate bill
There was a lot of consumer action happening on the ground. Frustrated buyers expressed their agitation on the streets. Grievances of home buyers, like a family required to pay hefty rent and a hefty EMI together was in the spotlight. There were cases where the home buyers shifted to their owned house, even when full amenities like a lift were not in place. There were also allegations that mass advertising through different channels have misled the buyers. A strong case in point was when a big project developer was brought into the limelight, by flat owners for building floors above the permitted level. The case was brought to attention by the owners of the house in the same building, with its fate hanging in balance in the court now.
The real estate bill was introduced to bring transparency in home buying transactions to the core. Some highlights;
1. A state real estate regulatory body was formulated as a government representative to deal with consumer grievances
2. More importantly, the project developer is required to park 70% of the funds collected through booked amount in a central bank account. This was done to stop the business temptation to recycle funds in new projects
3. Now, the buyers will pay only for the carpet area, leaving no ambiguity on the matter
4. For a delay in the project, the developer will be legally bound to pay the EMI paid by the consumers back to them
5. The concept of after-sales service has been incorporated, if any deficiency is noted by the consumer
6. Developer is not allowed to make any changes in the project plan without the consent of all the buyers as this will be viewed as a money extraction allegation legally now.
(Advertiser-Sponsored Feature: A Marketing Initiative)