Uttar Pradesh’s Housing and Urban Planning Department has begun to investigate flats that have been handed over to buyers without formal registration.
A worrying trend has emerged in Uttar Pradesh, where builders are handing over flats to homebuyers without completing the mandatory registration process, resulting in significant financial losses for both the state government and the homebuyers themselves. This practice, which has gone largely unchecked, could cost the government crores in lost revenue, while buyers are left with higher maintenance fees and reduced control over their properties.
The Uttar Pradesh government has now taken notice of this issue, instructing local development authorities to compile a list of builders who are bypassing the registration process. This follows a concerning pattern in which developers issue possession of flats only after securing an Occupation Certificate (OC) and Completion Certificate (CC), but neglecting the crucial step of registration.
Under the Uttar Pradesh Apartment Act and the Stamp Act of 1899, developers are legally required to complete the registration of the property before handing over possession to buyers. However, many builders are exploiting a loophole by simply transferring possession with an OC and CC, a move that avoids the payment of substantial stamp duty fees. The result is a severe loss of revenue for the state, with estimates suggesting that approximately 600 flats in Ghaziabad alone have been handed over in this way, leading to a staggering loss of up to Rs 12,000 crore in potential stamp duty revenue.
In response to this growing issue, Uttar Pradesh’s Housing and Urban Planning Department has begun to investigate flats that have been handed over to buyers without formal registration. The Ghaziabad Development Authority has also been ordered to prepare a detailed report on the matter. This follows a previous attempt in 2018, when the Ghaziabad district administration filed an FIR against three developers for similar offences – accepting full payments from buyers but failing to complete the registration process.
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Hidden Costs for Homebuyers
Homebuyers, meanwhile, are bearing the brunt of this loophole. Builders intentionally delay registration for financial gain. When a flat is sold without registration, the builder retains control over the property’s maintenance, allowing them to charge higher maintenance fees. Once registration is completed, this responsibility shifts to the Apartment Owners Association (AOA) or Residents Welfare Association (RWA), which typically results in lower fees for the residents.
In addition to inflated maintenance charges, builders also profit from electricity sales. Builders purchase electricity from the government at a subsidised rate and resell it to the residents at a higher rate, pocketing the difference. However, once a flat is officially registered, the buyer gains full ownership, and the builder loses the ability to charge inflated rates for services like electricity, which further reduces their profits.
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For those considering buying a flat in Uttar Pradesh, it is crucial to ensure that the registration process is completed before taking possession. Without registration, you risk being overcharged for maintenance and utility services, and you may face difficulty in asserting your rights as a property owner. Additionally, by bypassing the registration, the builder may be attempting to evade taxes and other financial obligations, which could leave you with an incomplete or legally insecure ownership claim.
In light of these issues, prospective buyers are advised to remain vigilant and demand proper registration before accepting possession of any property. It is important to remember that while an Occupation Certificate and Completion Certificate may seem like sufficient proof of ownership, only through official registration can buyers fully secure their rights.
