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Business News/ Politics / News/  What nobody tells you when you are buying a house

What nobody tells you when you are buying a house

Consumers assess a property on price, location and builder reputation, but the experience of living in an apartment complex depends on the RWA.

As the demand for well-maintained gated communities with good amenities grew post pandemic, so has the role of the RWA.. Illustration: Durga/MintPremium
As the demand for well-maintained gated communities with good amenities grew post pandemic, so has the role of the RWA.. Illustration: Durga/Mint

BENGALURU : When Rashmi Singh and her family moved into their new four-bedroom apartment at Gurugram’s Ireo Victory Valley in August 2018, everything seemed perfect. The leafy outdoors, the sandy beachscape and pool, the rooftop restaurant and the swanky club were just what the brochure had promised it would be.

Designed like a valley, Victory Valley’s most striking feature is the 51-storey tower (the tallest in Gurugram), flanked by smaller towers and villas, all running down a slope. The developer Ireo Group was also well known and backed by private equity capital.

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But soon, problems began. Power was still supplied by diesel gensets, water came from tankers, and work on sewage lines and basements was incomplete. The residents’ welfare association (RWA) was still run by the builder. Then came covid, and all hell broke loose. The annual maintenance contract was not renewed, some lifts didn’t work and a fire safety clearance was absent. When protests grew, Ireo asked residents to form an RWA. But the homeowners, now wary of the developer and worried that work would further lag, declined. Soon, project sales almost stopped and prices tanked. From 8,500 per sq ft at one point, it tumbled to 5,500-6,000 per sq ft.

“Despite paying maintenance, upkeep of the property was appalling. Many wanted to sell and exit. The market was bad. A family we know bought a 3BHK apartment for 1.68 crore, down from 2.15 crore. It seemed like a distress sale," says Singh.

After months of protests, in February this year, the builder finally addressed many of the major demands of the residents, and homeowners finally formed the Victory Valley Condominium Owners’ Welfare Association (VVCOWA). A new 12-member RWA was elected. Soon, things changed. Water and power supply was regularized, maintenance streamlined, and a new facilities management firm appointed. Maintenance fee too was cut to 4 from 4.20 per sq ft.

Illustration: Durga/Mint
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Illustration: Durga/Mint

Now, prices have climbed to 10,000-11,000 per sq ft. Though less valued than other premium projects nearby, the association is upgrading the society to make it more appealing. “In the last six months, there has been a marked difference. The greenery is better maintained, a school bus area for pick-up and drop has been demarcated, AGMs are held and residents are updated. Quality of life has improved and it’s a big relief," says Singh.

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The Victory Valley story underlines the vital role played by the RWA, which is largely accountable for the maintenance of a property after the builder’s handover. It is the unknown factor when one buys or rents a property.

An efficient RWA adds value to not just the longevity or saleability of a property but also to the residents’ quality of life with its timely maintenance, quick resolution of problems and assurance of a safe and secure environment.

As the demand for well-maintained gated communities with good amenities grew post pandemic, so has the role of the RWA.

Value addition

A functional, proactive RWA is the reason why ATS Greens Paradiso in Greater Noida pulls in a higher price over nearby projects like Stellar Icon Apartments and Unitech Heights. Or why older apartments at Hiranandani Gardens in Mumbai’s Powai cost 15-20% more than newer projects in the vicinity. While the brand and quality of construction count, as a project ages, its value largely depends on its maintenance.

Property agent Sandeep Maheshwari, who is trying to sell a 3,000 sq ft apartment at ATS Greens Paradiso for 1.35 crore, says the jump in prices for the property over the past six months isn’t only due to the upcoming Jewar airport. The fact that the 32-acre complex is one of the best maintained properties and has a proactive RWA is another big plus point for prospective buyers in Greater Noida.

Also, it’s the quality of maintenance that tests the efficiency of an RWA and not necessarily the high maintenance fee. Priyaranjan Kumar, who heads the retail sector at a private equity firm, would agree. Kumar and his father chose to buy a 3BHK in Stellar Icon Apartments over Unitech Heights, which was later mired in legal and financial battles.

“Maintenance is a tricky subject. Everyone wants a well-maintained property, but no one wants to pay for it. When a building is 12-13 years old, there are construction and maintenance challenges. While I am happy with the infrastructure maintenance, I also realize cosmetic elements in a property need more money," says Kumar. Maintenance fee (at 1.6 per sq ft) in the society is among the lowest, he adds.

RWAs that spend regularly on maintenance make a huge difference. “They have the ability to create wealth for society members by increasing the value of the property. Apart from regular price appreciation, when owners want to sell, construction quality, usable spaces, maintenance and amenities are the other determining factors," says Santhosh Kumar, vice-chairman, Anarock Property Consultants.

Keeping it club class

Last year, Ajay Aswani, 35, paid about 3 crore for a 2BHK at the Golden Oak property complex in Hiranandani Gardens, a large mixed-use township. Built in 1995, Golden Oak is well-maintained but without the frills. In Mumbai, unlike NCR, location is key and buyers pay a premium for it.

In a high-value location like Hiranandani Gardens, the builder also ensures the properties are kept well owing to the price premium.

In DLF Ltd’s super luxury projects such as Camellias and Magnolias in Gurugram, the builder owns the club, fine-dining restaurants and theatre while the rest come under the RWA. There’s a reason: DLF spent nearly 600 crore on the Camellias club. In luxury housing projects, the club is the showcase designed to attract a certain profile of buyers. Property brokers say if the club and restaurants were handed over to RWAs, they would turn them into canteens, leading to a significant price depreciation.

“The clubs in these projects are run by a team of professionals because they are luxurious and need that kind of attention. They need a hospitality approach," says DLF group executive director and chief business officer Akash Ohri. Similarly, Bengaluru-based Embassy Group owns the club at its Boulevard project. The club is open to outsiders for a membership fee.

“Embassy Services (an independent facilities management arm) controls the quality in all our projects. The RWAs have done a good job in maintaining some projects. But we always keep an eye," says Embassy Group chairman Jitu Virwani.

The importance of RWAs was acutely felt during covid. People realized the need to live in gated communities, for the care and security they accord. “The trust factor really went up for RWAs because they made things easier—from setting up protocols for doorstep grocery deliveries to arranging medical help on the premises," says Ankita Sood, head of research,, and, adding, “We’ve seen families from Delhi moving into gated communities, because you can go out for a walk, work from the clubs, use inhouse restaurants and not be prisoners in your balconies."

Owners vs tenants

Yet, RWAs also overstep their limits sometimes . For a prospective home buyer or tenant, it is hard to tell whether an RWA is good, bad or ugly, unless from experience.

Paloma Guha, who moved into a high-end apartment complex in Bengaluru’s Outer Ring Road area last year, recalls being abruptly stopped by a guard from accessing the terrace. Baffled, she confronted the RWA manager, who said the restriction was for “security reasons" and applied to tenants only. She also learnt that she was charged a higher maintenance fee than the owners who stayed there. “The location is prime and the property is maintained well. So the question was: Should we argue about this kind of discrimination or just live with it?" says Guha.

In most housing societies, there is a clear, often unspoken, bias in the way tenants and home owners are treated. Tenants, perceived as transitory, usually have little say in the RWA’s decisions. Often, single male or female tenants face the brunt of rules. Single women can’t return home too late, a group of bachelors on rent are a no-no, tenants can’t have closed parking—the list goes on.

In Mayur Vihar, an upmarket neighbourhood in east Delhi, many housing societies don’t encourage tenants with pets. A media professional says she and her pet dogs faced many levels of discrimination during her 14-year stay in apartments across the area. “One society suddenly decided that no new tenants can have dogs," she recalls. “Even if landlords say it’s not an issue, brokers in Mayur Vihar will tell you if you have a dog, it’s a problem. Pets are denied access even to the parks in societies. I remember taking my dogs for a walk at 11pm, so that no one could see us," she says.

There are many instances where RWAs cite bylaws against young and unmarried tenants, freedom of movement, keeping pets or feeding pets. Many of these discriminatory bylaws are in fact illegal. But some RWAs often take on a policing role. Especially during covid, when their jurisdiction expanded and they set rules that were far more stringent and arbitrary than the ones prescribed by the government.

“An RWA is not a legal entity and it needs to follow the bylaws as per the Cooperative Societies Act and Apartment Ownership Act. The bylaws are regulations, and can be challenged in court if fundamental rights of residents are infringed upon. We see several cases where residents complain about arbitrary regulations levied by RWAs," says Mumbai-based advocate Vinod Sampat.

How much to handle

The scope of work of an RWA is a challenge as there is always a risk of overhandling. Brisk Lumbini, a gated community in Dwarka Expressway, Gurugram, witnessed a long tussle between homeowners and the builder, over the latter’s demand for extra payment after delayed possession. The RWA finally took over in 2019, but many things in the project needed to be fixed.

Telecom professional Gaurav Prakash, who bought a 3 BHK for 86 lakh in 2012, says it’s currently valued at 1.10 crore. “There was depreciation when the builder was maintaining it. Rates went up a little when the RWA took over. We expected further rise but that didn’t happen. An RWA can address smaller issues but larger structural, quality issues need to be fixed by the builder. It’s unfortunate because this is a good location," says Prakash.

Stuck projects, particularly in NCR, in recent years have seen RWAs taking builders to court, or even donning the role of a developer to complete pending work.

Cost is key too

How an RWA manages its fund well is another differentiator in any housing society. “Maintenance costs increase but if they go very high, it becomes difficult to rent or sell. Tenants usually go for the one with lower rental," says Saurabh Garg, co-founder and chief business officer, NoBroker. Rental income and capital values of a property are also interlinked.

DLF’s Ohri said that in its group housing projects, the company manages the society for five years, as per the Haryana Apartment Owners’ Act, and sets the standards for the RWA to continue after handover.

At Victory Valley too, the RWA went step by step to clear the mess. “We first addressed small issues like putting signages and lighting up dark areas. Then we took up bigger issues like doing up the lift interiors. The aim was to take one decision every day. If it went wrong, there could be course correction," recalls Aashish Thakral, general secretary, VVCOWA.

Today, around 700 families live in the complex, with more expected to move in by the year end. Prices have slowly inched up, and Thakral says with some more upgrade, they can touch 14,000 per sq ft. Two years ago, that would have been wishful thinking.

Elsewhere in Mint

In Opinion, Pranjul Bhandari does a pulse check on India’s economy before the RBI policy meet. Rahul Jacob writes on the secrets of Indonesia's startling economic rise. Akhil Gupta argues telecom dues might help reduce India’s fiscal deficit. 

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Updated: 29 Sep 2022, 09:08 AM IST
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