Rental Value Not a Benchmark for Compensation: NCDRC
In a significant ruling, the National Consumer Disputes Redressal Commission has said that a property’s rental value cannot be a parameter for granting delayed compensation to the homebuyer as it constitutes just about 3-4 percent return on the price of the house and the 'paltry amount' would not co
Published -
Jul 17, 2020 5:17 AM
In a significant ruling, the National Consumer Disputes Redressal Commission has said that a property’s rental value cannot be a parameter for granting delayed compensation to the homebuyer as it constitutes just about 3-4 percent return on the price of the house and the 'paltry amount' would not compel the developer to complete construction within the agreed timeframe. "If compensation in such cases is computed solely on the basis of the prevailing rentals, the builder would have no incentive to complete the construction within the agreed timeframe, since he would know that even if he diverts the funds collected from the flat buyers to another project or for other purposes and that leads to delay in completion of the construction he would be able to get away paying a paltry compensation which would cost him not more than 3-4% of the capital employed,” the NCDRC bench has ruled. It also ruled that a real estate company cannot levy holding charges on a homebuyer as it does not suffer any loss on account of a buyer taking possession at a later date due to an ongoing court case. Even companies that have purchased properties in their own name for their directors and family can approach the consumer court for redressal but firms are not entitled to mental agony as is the case with individual buyers.
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