Amended Rules Give A Say To All Stakeholders - including the flat buyers:
The Insolvency & Bankruptcy Board of India (IBBI) has amended rules to mandate that any resolution plan for a company has to explicitly state how it has dealt with interests of all stakeholders--a move aimed at protecting the interests of home buyers of real estate players such as Jaypee Infratech and some of the entities of Amrapali Group.
The revised rules were notified by the regulator for insolvency and bankruptcy proceedings last week and will ensure that banks and other creditors do not get away by protecting their interests at the expense of others who are impacted by the action. Banks are part of the creditors' committee, the key decision-making body after a company is admitted for bankruptcy.
“The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests,“ said a lawyer specialising in bankruptcy cases.
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This is indeed a welcome step, no doubt about it but yes, flat buyers will only have part to putforth their say before auctioning of the assets start. It doesn't mean that flat buyers will get what they want but atleast now they are in the loop which wasn't the case earlier.
ReplyDeleteThe bigger picture though is now bankrupt builders, what buyers can do if builders go insolvent etc. is now being discussed & that too in mainstream media as well. Just 2-2.5 years ago, if someone had said prices will crash & that builders will go bankrupt, they were called pessimists or idiots. The actual effect to be seen on ground of financial mismanagement made by builders can't be seen over-night ! Infact, 2 years ago how many would have believed DSK will indeed go bankrupt ?
And yes, such news simply tear apart the false notion created by builders & hoarders that real estate is always good to invest & that prices only go up !
Looking at one builder go bankrupt after another, it makes sense to stay put on rent or buy ready for possession flat with OC.
Btw, here is a very good latest article based on current real estate prices & rentals based on latest figs & as usual, it's renting which wins than buying.
At current real estate prices, should you rent or buy?
At current market prices where the rental yields are just 1-2%, renting is clearly better than buying -
Should you rent or buy a house? Many young families face this decision when they move out of the joint family to be on their own or when they shift to a new city for work. Notice that this is not an invest-or-not question, to which the answer will be very different. This is a should-I-rent-a-house-that-I-will-live-in or should-I-buy-now question.
At current market prices where the rental yields (annual rent divided by value of property, or the return you get from the asset if you were to rent it out in percentage terms) are just 1-2%, renting is clearly better than buying. Look at it this way— what you can rent for Rs25,000 a month will cost you at least Rs1.2 lakh in EMI.
Don’t buy and stay on rent if the rent does not cover even 60% of the EMI.
Stay on rent and accumulate the down payment so that the EMI is lower when you decide to buy. How to do that? Live on rent, save a part of the money you’d have spent on an EMI and gather at least some of the down payment to reduce the EMI burden when you finally buy a house a few years down the line. Back of the envelope numbers say that if you rent for Rs30,000 and put another Rs30,000 a month in a balanced fund with a conservative return expectation of 8% a year, you will have around Rs22 lakh in five years. Renting will not seem like money down the drain if you have a larger plan in mind—that of buying the house you want to live in at a price that does not destroy your financial stability.
http://www.livemint.com/Opinion/2lUZWrAyyCXTl1L2QfgPUN/At-current-real-estate-prices-should-you-rent-or-buy.html
500 flat buyers fear losing millions after project by 2 diamond traders runs into mess -
DeleteAround 500 people, many of whom had paid up to 85% advance money in a housing project in Mira Road, fear they'll neither get their dream homes nor their money back, as construction has remained stalled for the last four years.
https://mumbaimirror.indiatimes.com/mumbai/cover-story/500-flat-buyers-fear-losing-millions-after-project-by-2-diamond-traders-runs-into-mess/articleshow/60963685.cms
Morale of story is avoid under-construction flats irrespective of any rules being framed by Govt as making rules & implementing them are 2 different things.