Deposits for MHADA flats to go up

Mumbai: The Maharashtra Housing Area Development Authority (MHADA) is likely to increase the earnest money deposit (EMD) for Middle Income Group (MIG) and Higher Income Group (HIG) flats as they want to weed out non-serious applicants and stop corruption.

Typically, once projects are ready, MHADA calls for applications and allots flats by a lottery system. The flats are way more affordable than those in the open market. It puts a five-year ban on sale of flats and the EMD is normally fixed at ₹25,000 or ₹50,000 depending on the category of flats being invested in. Buyers are known to put in multiple applications in the names of relatives, thereby compromising the scope for genuine buyers.

To avoid this, key officials of MHADA have proposed that the EMD be increased to five or 10 per cent of the cost of property.

Sources in MHADA said when lottery results are declared, agents call up winners and ask them to sell the flats at a profit. They also take away all the papers, including allotment and possession letters, from the seller and after the five-year moratorium, the flat is legally transferred in the new buyer’s name.

Milind Borikar, chief officer of MHADA said, “While we may soon increase the deposit for MIG and HIG flats, we will not do so for those from economically weaker sections (EWS) in lower income groups (LIG).” Most EWS and LIG flat seekers don’t have enough deposits and depend on loans to pay after a lottery win.

Former Maharashtra Real Estate Regulatory Authority chief Gautam Chatterjee said, “When I was the vice president of MHADA, I came across well-off people pretending to be from the economically impoverished class seeking flats worth ₹2 crores for ₹50 lakhs to sell. The undeserving people still sell MHADA flats for profit. However, time will tell if the amendment is successful.”

A former officer from MHADA’s vigilance department said, “Many view the flats as a good investment opportunity. Though the quality of construction is poor, they cost must less than those offered by private builders. Besides, MHADA does not charge any money for parking spaces. In most MHADA projects developed since 2000 some of the lottery winners have been known to sell flats as soon as their papers are cleared by MHADA.”