At Lunawa Sea View Residencies meant for ‘low and middle income families’

BY SURESH PERERA

Prospective buyers of Sea View Residencies at Lunawa developed by the Urban Settlement Development Authority (USDA) for “low and middle income families” have been left kicking their heels after they were informed last week to raise “personal loans” ranging from Rs. 3.5 to Rs. 4.1 million from any financial institution to procure the units.

This is apart from the 25% down-payment plus another Rs. 240,000 as “related charges”, which have to be paid upfront to acquire the flats, the prices of which range from Rs. 4.56 million to Rs. 5.58 million.

For example, to procure a unit valued at Rs. 4.56 million on the fourth floor of the complex, one has to make a down-payment of Rs. 1.14 million.

The general practice earlier when selling housing units in complexes specifically meant for “low and middle income families” was for the government institution concerned to arrange a feasible credit facility largely through HDFC Bank.

However, prospective buyers of Sea View Residencies complained that they were summoned to ‘Sethsiripaya’ at Battaramulla on Tuesday and told in no uncertain terms that they need to secure a bank loan if they wanted to procure a unit in the newly-built housing complex.

“When we protested that we are low and middle income earners, and no financial institution would offer a credit facility without collateral, an official interjected that there was then no option, but to give up the idea of acquiring a flat”, the distraught buyers said.

Application forms were initially issued to interested buyers on a non-refundable deposit of Rs. 2,000 each. After shortlisting applicants, interviews were called, where they were assured that after the 25% down-payment on the total value of each unit was made, a credit facility would be arranged through the Bank of Ceylon under a monthly repayment plan at 6.25% per annum, they noted.

The availability of a bank facility was also clearly outlined in letters sent to buyers shortlisted as “eligible applicants” to purchase the flats. However, in a sudden turnaround, the promised loan facility has been ditched, they complained.

Some prospective aspirants had in fact approached banks for some degree of relief, but were specifically told that they should either surrender the deed of the flat or some other form of collateral to secure a ‘personal loan’.

“If we had millions of rupees the USDA is now demanding for the units, we could have purchased a small house in the area without waiting for more than a year until the housing complex was completed”, they reasoned.

Whereas the highest priced unit in the complex costs Rs. 5.58 million, there’s a small house put up for sale for Rs. 5.5 million close to Moratuwa town, another shortlisted applicant said. “If I had ready cash, I would prefer to buy an individual house”.

“We were asked to make the 25% down-payment as early as possible, but in case the balance is not settled within the time-frame, refunds will be subject to an unspecified penalty”, he further said.

It appears that the government has built the Sea View Residencies for the wealthy or for those who pump funds, hold on for some time and resell at a considerable margin, he opined. “The deserving has been elbowed out”.

USDA Director-General, Major General (Retd.) Udaya Nanayakkara assured that he was aware of the issue and discussions are ongoing with banks to evolve a solution.

“We wanted to recover the construction cost of the housing complex as the land value has not been calculated into the price”, he told The Sunday Island.

“We were looking at recouping the investment upfront without opting for a time-consuming repayment plan”, he explained.

Another official, who asked not to be identified, admitted that 90% of the shortlisted applicants are now unable to procure units without a workable repayment scheme.

“We were aware that prospective buyers would be left in the lurch sans a bank facility as low and middle income earners don’t have access to millions of rupees in liquid cash. However, we had to adhere to UDA (Urban Development Authority) guidelines”, he asserted.

He said that with the growing displeasure over preference to “people who can afford” rather than “those who deserve” has resulted in looking at the process afresh and the possibility of arranging a bank facility is on the cards.

The President, and the Prime Minister, as Housing Minister, should be made aware of obstacles placed by an officialdom insensitive to the average man’s housing needs, he noted.

The applicants were shortlisted on the basis of a monthly household income of Rs. 75,000. Those who earned more than this were rejected as the flats are meant for low and middle income families, he added.

“At the end of the day, the displeasure generated will reflect on the government”, he added.

A UDA official said the complex was developed by the USDA and therefore “it’s their baby”.

“We had nothing to do with it”.