Project delayed, realtor Oberoi cuts interest

In an industry first, Oberoi Realty has cut interest rates charged on delayed payment towards flat purchase in its Splendor project in Andheri East from 24% to 9% following a delay in the possession date.

The interest was being levied as per the industry practice of charging 24% to flat buyers who have delayed payments.

In a September 6 letter to buyers at its Splendor project, Vikas Oberoi, chairman and managing director, Oberoi Realty, said, “One of the complaints that I have received is the aspect of charging of interest. My company is not in the money lending business and we do not want to derive profits by charging interest for late payments. The policy of levy of interest is used to ensure that the customers pay their dues on time so that the progress of the project is not hampered.”

However, we are examining all cases in Oberoi Splendor where interest has been levied. Firstly, we will revise interest rates from 24% p.a. to 9% p.a. and refund the differential interest collected from the customers,”  the letter said.

The move has taken property consultants by surprise.
“This is the first time I have heard of something like this being offered by a developer. With the recent Competition Commission of India cases coming to light, developers seem to turning more buyer-friendly. This will prove to be a very good move for Oberoi Realty as it will improve buyer confidence in the company,” a consultant who did not wish to be named said.

Oberoi officials, however, did not share the period of delay in giving flat possession. 

A buyer who has bought a flat in the project said, “Various buyers were given different possession dates depending on when the booking was made, which ranged between December 2010 and post-2011. We got soft possession of our flats in June 2011.”

An Oberoi Realty spokesperson said, “This was part of a communication process with the buyers, which the company undertakes on a regular basis.” Reasons for revision in interest rates were not shared.

Vikas Oberoi in his letter to the buyers cited regulatory issues and availability of raw materials and labour as the main reasons for delay in possession.

After the refund of interest charge, the company would hand over the balance 9% interest collected to the Oberoi Splendor society corpus.

The date for starting payment of maintenance charges has also been extended to November 2011 from September.