Bengaluru Builders Face Hurdles as e-Khata Delays Impact Real Estate Transactions - Read Now

Bengaluru's real estate industry faces significant problems due to the newly introduced e-Khata. Builders and developers lament widespread delays in property registrations, affecting the timelines of projects, inflow of cash, and resultant government revenue. Crimping all the critical transactions between stakeholders, the forced implementation of using e-Khata for registering sales, leases, and mortgage deeds has frustrated stakeholders.

What is e-Khata?
The BBMP, or Bruhat Bengaluru Mahanagara Palike, brings the e-Khata as an enhanced property record. Though the system has its own benefits in the long run, sudden implementation at the mandatory level creates hurdles for the real estate sector.

Builders argue that it would have been more effective had roll out been phased with enough stakeholders with enough time to get accustomed to the new system. Electronic Khatas, or simply e-Khatas for individual units in housing projects, also brought more complications, stopping handovers, and delaying final payments from buyers.
Effects on Builders and Developers

Delayed Registrations
The developers fail to register flat or unit registrations and result in incomplete projects without an individual e-Khata. According to Credai-Bengaluru, this problems are also affecting cash flow and delaying agreements.

Challenges in cash flow
Builders usually receive final payments from buyers after the registration of sale deeds. Because of delayed registrations, all these payments get held up and developers have to suffer from additional interest costs on bank loans. Says Ramani Sastri, Chairman, Sterling Developers, "3% of total project cost remains unpaid owing to these delays.

Higher Costs
The delays are affecting not just the developers but also increasing their operational expenditure. Interest payments on stalled projects and extended timelines strain the already burdened sector's wallet.

Government Revenue Loss
According to BBMP data, the rollout of e-Khata has resulted in a 42% reduction in registration revenue last month. Taxes, stamp duties, and registrations- critical sources of revenue for the government-have been delayed, straining public finances further.

Builder's Anomalies and Recommendations

Deregulate the Scheme
The roll-out of e-Khata should be phased, according to Credai-Bengaluru. A blitz rollout could present difficulties inasmuch as stakeholders might take time to get used to the new system, which may throw projects in progress off track.

Provisional Khata as a Resolution
According to Credai-Bengaluru provisional Khatas can be allowed to tide over registration bottlenecks for some time. This way, time-sensitive transactions will not be put on hold and yet the system will stabilize in a point of time.
Appeals for better communication and planning by the BBMP have also been done by the stake holders. The 42% one-day jolt in revenue is clear evidence that the present ones should be immediately addressed.

Impact on Buyers
Homebuyers are also bearing the brunt of e-Khata delays. With registrations stalled, buyers cannot take possession of their properties, leaving them in limbo. The inability to execute sale deeds means that buyers are unable to secure loans or legal ownership of their units, impacting their financial planning.

The buyers are not getting any closure because of the time constraint. Stakeholders come to us daily, but there is little we can do other than advise them to wait," Suresh Hari, vice-president, Credai says.

Industry Experts Speak Out
Kishore Jain, Chairman of Credai-Bengaluru, told it could be a game-changer, but again felt it needed to be planned well. In fact, he likened it to other digital transformations such as Digi Yatra where dual systems were in place during the transition phase to ease the impact.

Member, Governing Council of the Builders Association of India, HA Kiran explained that delayed registration creates a ripple effect, thereby reducing cash flows and increasing costs for builders; in the process, this reduces the revenues being generated by the government from taxes and stamp duties.

Future Conflicts
The e-Khata initiative has contributed a lot to improving the transparency and efficiency of property registration, but the challenges in implementing the same raised the requirements for further refinement in the approach. Builders and industry bodies demand

Phased implementation in order to avoid/seriously mitigate disruption
Provisional solutions, such as provisional Khatas.
BBMP to be clear on policy and timelines.

Key Takeaways for Stakeholders
Builders: Request phased implementation to avoid disruptions in their cash flow and project timeline.
Homebuyers: Expect a quicker conclusion to avoid further delay in the handover of properties.
Government: Registration reforms will recover lost revenue and make the burden on the industry easier.