Three years advance rent payable by developers under SRA projects: Maharashtra Government.

By Abhay Shah, Realty Quarter

In the past, many slum residents underwent redevelopment complained that developers didn’t pay the rent amount for the accommodation for transit. For instance, More than 100 slum residents of the Dhobi Ghat slum rehabilitation project in Mumbai have been telling us that they have not received their monthly rental from the developer for many years and few of them have had stay on the footpaths. In another situation, many people protested for non-payment outside a developer’s office.

In response to a discussion at the state legislative assembly, Maharashtra chief minister Devendra Fadnavis said that builders would have to provide rent for 3 years in advance on slum rehabilitation projects in the light of growing cases of developers’ defaults and harassment faced by inhabitants. The CM also emphasized that there is no harm in keeping a small portion as an advance of an escrow account when project costs amount to nearly Rs 50 crores, this is been attempt so there are no difficulties later.

Current problems faced in redevelopment projects

Residents are provided rent for alternative housing in the context of a redevelopment project until the date on which the apartment is held. “More than 5,000 instances were recorded in which builders have stopped paying the rent owing to lack of funding and projects stalled,” said representatives at the Slum Redevelopment Authority (SRA). The Authority has also given developers a stop-work notice for alleged failure to pay rents to the slum residents.

Omkar Mhatre, a resident of Mulund, shifted houses in the last 4 years after his society began its redevelopment. “The builder promised us five-year rent and instant possession while negotiating for our area. The project for redevelopment in the area began in 2013. To date only half of the tenants have units and approximately 200 rooms still have to be prepared. For the last three years, the builder did not give the rent. For the last seven years, the people of the area had been living in a transit camp, though it was only told the duration to be five years. The only response we get is ‘next month’ if people ask for the rent. Work on the project has totally stopped,” he complains. Similarly, Prabha Anande from Dadar, 80 years old, wrote to the CM to seek assistance as her project stalled and she was on the road.

Legal specialist Vinod Sampath says: “When an agreement is signed by two parties, negotiations involve a whole range of matters, such as the carpet area, price to be quoted and use of materials, etc. The focus is currently moving from luxury apartments to budget and smaller apartments. Projects normally take between 2-5 years. There is therefore nothing false when builders’ cash is blocked for around three years to pay rent to slum dwellers in advance. If the projects are finished early, the authorities can ask the slum residents for refunds. In such a scenario, slum-dwellers will suffer less if the builder wants to leave the project. Although, builders need to have more cash flow.”

Things a homeowner can do while not receiving monthly rent from a developer in a redevelopment project.

In the event that the builder does not pay for the rent, a complaint can be lodged in the Consumer Forum to recover rental arrears. The President of ALMANAC, Rajkumar Sharma, says: “A legal notice should be sent to the builder, asking him to immediately start the payment of the rent to which you have right for each month, as and when the same falls due.” The developer must comply strictly, in line with the development contract.