HDFC asks developers to give warranty

Housing Development Finance Corporation (HDFC) has called for provision of warranties for houses as housing is the largest capital investment an average person makes.

Deepak Parekh, chairman, HDFC, in his statement in the housing major's 2004-05 annual report, said 2-3 year warranties for houses need to be looked at just like any other product.

Housing projects are based on quality and the onus for providing it must be on the developer, he said.

The practice of asking customers to pay up 100 per cent of the cost of the house upfront has also been stated to be as a matter of concern.

"Good governance dictates that the consumer should pay for what he gets and if he invests in a building under construction, then he should be taking on only that much risk. In other words, payments to the developer must be linked to the progress of construction," Parekh said.

Real estate, perhaps, forms the largest asset class of the world and is the largest source of wealth for families.

It is also the most imperfect asset proven by the fact that different people pay different prices for the same commodity.

To ensure that focus never moves from long-term benefits to short-term gains, there is immediate need for transparency and accountability in the housing sector.

Parekh said HDFC is ready to take the first step to initiate change by "supporting" developers willing to tackle head on issues like pricing on the basis of carpet area.

Housing loans are currently skewed in favour of the salaried class and not the self-employed.

"Since we are in an industry that works to fulfil a basic human need, we need to correct this and ensure that all individuals are provided the same treatment. It is such changes in mindset that will enable this sector to progress in the right direction," Parekh stated.