Buyers Not To Be Charged Extra For Parking Space
The Central Mumbai District Consumer Disputes Redressal Forum recently said that developers cannot charge buyers extra for a car parking space. This verdict came out in response to a complaint lodged against Tata Housing Development Company in the forum. The developer was directed to refund a buyer car-parking charges and pay him compensation.
The Supreme Court had passed a judgment in August 2010 saying that a developer cannot sell an open space or parking space as it was a part of the society common area. Upholding this judgment, the consumer forum said that the developer could not charge any amount for use or sale of parking space.
While this verdict is welcome by most prospective buyers, there are counter arguments for this verdict. Here is a critical look about the pros and cons of this verdict.
A fair verdict
The verdict is encouraging as it makes sense from a legal and economic point of view.
1) When a developer sells a flat to a buyer, the charges for the flat not only includes the carpet area (the buyers private area), but also for the common spaces and support structures such as staircases, lifts, corridors, sewage disposal system, parking spaces and so on. In fact, many states have regulations that require adequate parking spaces. Builders incorporate these costs into the market price of the flats they sell. Hence, it becomes illegal to charge extra for parking space or any of the common amenities.
2) Allowing developers to charge extra for parking space is also bad economics, especially during times when demand for parking increases multifold in a very short span of time. This is because, with limited parking space, the developer has no incentive to maximize supply of parking slots. With that, the developer can withhold supply of parking slots and charge maximum prices for each parking slot. If the parking slots are free, the flat owners can attempt to come up with innovative measures for maximizing the number of parking slots.
Doesn’t account for ground realities
While this may sound a fair deal, many argue that the verdict does not take into account the ground realities. Some of the counter arguments for the verdict are:
1) The number of cars in India are constantly increasing. With this trend, paying for parking ought to become normal. This is also the only way of dithering people from buying more cars while encouraging them to use public transport. It however needs to be understood that the public infrastructure and transport services must be improved and can happen only if more people use those options and demand better services.
2) Big metros such as Mumbai and Delhi have parking space constraint. It is in this scenario where ‘pay for parking’ becomes relevant. Developers of residential properties receive almost no support from municipal authorities. Most of the residential projects are self-sustained units with provisions for water supply, electricity and parking spaces. It is only fair that developers are allowed to charge for parking spaces. While on one hand, this will force more people to use public transport, on the other hand, it will assure buyers of the space guaranteed parking everyday.
3) It is also better to allow the developer to charge extra for parking space. Otherwise, they will pass on the cost through other hidden means to the buyer. Ultimately, it is again the buyer who bears the brunt. A buyer who does not use the parking space will pay the same as the one who parks multiple cars. Moreover, common parking spaces can create chaos, which may lead to disputes and fights. ‘Pay for parking’ is the only alternative to avoid this scene.
With both arguments having equal weightage, measures will have to be taken which can appease the buyer as well as the developer.
