It is the corruption in the business from the word go.
And the money the buyer pays for the apartment over and above his ability to pay—the ability involving the mortgage which ties him up in debt for his entire working life—is to fill someone else’s pockets.
One nice way the builder recovers these business costs is to charge for the space to park a car. It is now mandated that in the Mumbai metropolitan region the builder has to provide one parking slot per apartment. Period.
The flat sizes are shrinking, and some are small enough as not to be adequate to park a car. But the car park costs money. Some builders do not even bother to allot them with the flat. That onerous task is left to the cooperative society formed after all the flats are sold. A flat and a parking slot are not linked in the sale deed.
The normal assumption is that the cost of the parking space is worked into the price of the flat. But that is off the mark. The price, for instance in Thane, is Rs 5 lakh per spot.
Some 18 months ago, it was Rs 3 lakh apiece for car parking. The apartment prices are on a plateau because of buyer resistance to prices, but parking slots cost more already.
This was the price for the parking slot quoted this Friday morning. And no, there would be no receipt for it; it has to be in cash. Yes, it can be included if the buyer desired in the value at which the sale documents are registered.
The value stated does not mean that it is exact price of the flat. After all, flats costing lower than the ready reckoner for any area are registered at the reckoner value. Value is different from price paid and received, it is argued.
Those who don’t want that, either the builder or the buyer, have to pay for it in cash and wait for the flat with the attached parking space. It does not matter if it is open or space under and on a podium. It is explained that providing a parking space does not mean it costs as much to create.
The arithmetic is as follows: a tower of 20 floors, not uncommon these days, with six apartments per floor and a parking space at the rate of Rs 5 lakh per apartment is clear Rs 6 cr.
That cash is what goes to pay the bribes.
No builder likes to shell out from his margins. These days, one claims, even this illegal payments sought and received are not enough. Some are forced to even part with a flat, benami, of course.
These days, notwithstanding the unearthing of scams, the public anger expressed loud and clear at Ramlila Ground and Janpath in New Delhi, the waving of placards at Mumbai’s Azad Maidan, the demand is for higher sums of grease money.
There is a route along which the bribes are dispersed and mostly it is at the various tiers of the civic body in whose jurisdiction the property is being developed.
The payment starts from the moment a plan is proposed and it is called a ‘hearing fee’. Thereafter, at every step, a fee has to be paid. So much so, in another city in close proximity to Mumbai, the civic officials do not even visit a site to see if the plinth has been laid only after the pile was on place. The bribes, it is said, make for comfortable working life; no site visits, no trudge on the construction site.
Till the building is ready, a flunky goes to the civic offices from the builder’s. When it is all done, then the bargaining starts for the commencement certificate. It is here that every step the file moves up, the payoff increases.
But the need to build a coffer for these starts from the moment a land is located and is registered if it is not a three-way contract between the builder also known as developer, the land owner and the buyer. Land deal involves cash exchange and which ends only after the builder leaves for a new project.
However, the illegal sale of parking space is not the only war chest. The cost of inputs – rubble, sand, cement, everything else thereafter, are inflated. This over-invoicing helps ensure ready cash for one does not know, new and extra demands from the babudom.
That is why, periodically, the builder-developers keep telling potential buyers that come a cut-off date, the prices per square ft would rise. That is said to be one way to persuade a likely buyer to plump for the offer but those increases are not to neutralise inflation but keep the ready flow of money.
Now you know, why flats remain a dream for many and for those who realise it, it costs more than it ought to. It is not the builder alone who makes them dearer, the officialdom too has a hand in it – including from the office of the registrar of stamps.
The builder-developer shells out Rs 5,000 per sale agreement as ‘scanning charges’ which is the way of telling you that it costs that much to get an appointment and register the document without having to wait in a long queue. Without that, one may as well wait for ever.
The other day, a real estate broker was saying that the registration office in Thane was done up by the brokers. It is a fact that Thane Municipal Corporation’s town planning department offices’ computerization was funded by two builders in Thane. In October last, Loksatta had reported how the builders lobby had set aside Rs 1 cr for ‘development work’, an euphemism, indeed, for getting things done, in Thane.
However, let it not be said that Thane is the only place where these things happen. Look deep in any city and there would be a cesspool. No city is free of it. It is a universal urban phenomenon.
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