Should Developers Be Allowed to Alter The Layout Plan?

There is a general agreement that Indian real estate markets need greater transparency. While there have been cases of buyers not receiving their flats on time or being unhappy with the quality of the construction, there have also been cases of builders violating the norms, governing the floor plan and layout of apartments.

On September 5, the Noida Authority issued public notices inviting allottees to object to developers, applying for completion certificates. Allottees of apartments in Noida can object to builders making major alterations to layout plans. If home buyers prove their claims, builders would not get completion certificates.

According to the UP Apartment Act, 2010, real estate developers must obtain the consent of every allottee before making major changes to the floor plans or layouts. Allottees are allowed to visit planning department offices and verify whether the layout plans submitted by the builders violate the builder-buyer agreement. What are the possible implications of this? How would this influence the construction of residential projects in Noida?

In Noida, there have been cases of builders making significant alterations in layout plans to increase the floor-area ratio (FAR) despite a directive in the UP Apartment Act, 2010, prohibiting them to do so. FAR is the ratio of the floor areas of a building to the area on which the building stands. In some cases, they violate the norms to increase the area of open spaces in residential projects. When home buyers can make them accountable, this is less likely to happen.

In many cases, real estate developers make major alterations to layout plans because they expect urban local authorities to approve the changes they made. The Noida Authority is raising objections against this practice now. 

Often, developers violate the norms to increase the FAR. Many real estate developers point out that restrictions on FAR hinder vertical development. When there are limits on vertical development, the built-up area of a city will be spread over a larger area, leading to longer commutes and higher carbon emissions. This also reduces the supply of homes, making them less affordable.

When builders alter the layout plan, home buyers end up paying more than they had expected. Real estate developers, too, suffer the costs of unexpected changes in the layout plan. In many cases, engineering constraints are a major factor that compels them to change the layout plan. Builders get entangled in long, legal battles.

 Many developers point out that supply in other sectors of the economy can be raised when production process becomes more sophisticated. But, in real estate, supply can't be raised indefinitely in urban areas because the supply of urban land is limited. However, there are no such limits on the floor space on which construction may happen. Developers often question authorities on why real estate is the only sector in which producers are not allowed to raise supply.