Paying EMIs but no sight of house? Find out how to avoid buying into such projects

Sachin Kala is still waiting to get possession of the flat he booked four years ago. The builder had promised to hand over the apartment in December 2013. But even though Kala has paid almost 80% of the total price, the project is still not ready to move in.

Kala's only solace is that he is not alone. Thousands of home buyers across the country are facing the same problem. Housing projects are being delayed because cash-strapped builders are unable to complete construction. According to real estate analytics firm PropEquity, around 45% of the 3,753 projects in the Mumbai Metropolitan Region offered for possession during 2011-2014 are incomplete. The problem is more acute in NCR, where a whopping 78% of 856 projects are running behind schedule. The same trend is visible in other major cities like Bengaluru, Chennai, Hyderabad, Pune and Kolkata.

There are several reasons for the delays. To start with, the demand for housing from end-users has slumped due to high prices. The flurry of new launches during the boom period has also stretched the execution capabilities of builders. Many developers are facing a severe cash crunch because they diverted the sale proceeds from the new projects to those under construction.

For buyers, a new hope has emerged in the form of the Real Estate Regulatory Bill. The bill has several buyer-friendly clauses (see graphic) which could bring some order in a chaotic industry. For instance, the bill proposes that builders deposit 50% of the amount received from buyers in a separate escrow account to prevent diversion of funds. Also, a buyer can claim full refund with interest if a builder fails to deliver a project on time. The bill has been approved by the Cabinet and will be tabled in Parliament.