ED Raids Delhi-NCR Locations in Homebuyer Fraud Probe

The Enforcement Directorate has conducted searches at multiple locations across Delhi-NCR as part of a money-laundering investigation into alleged cheating of homebuyers through “subvention” schemes, according to officials cited by ETRealty.

The searches were carried out on Thursday and relate to two real estate companies, AVJ Developers (India) and Rudra Buildwell Construction. The investigation is being conducted under the Prevention of Money Laundering Act and stems from two separate FIRs registered by the Central Bureau of Investigation, according to the officials.

At the centre of the probe is the alleged use of “No EMI till possession” schemes to attract homebuyers.

Under such schemes, buyers typically take housing loans to purchase flats while the developer undertakes to service the loan's interest or EMIs for a specified period, often until possession. According to the CBI findings cited by officials, buyers in the cases under investigation booked flats after being offered such schemes but did not receive possession even after several years.

The ED is examining allegations of a builder-bank nexus in connection with these transactions. The agency's money-laundering investigation follows the CBI's underlying probe into the alleged cheating of homebuyers and investors.

The cases highlight one of the key risks associated with subvention-linked home purchases: the financial relationship between the buyer, developer and lender can continue even when a project does not progress as promised.

For a homebuyer, the attraction of a “No EMI till possession” offer is straightforward. The buyer can book a property and take a housing loan without immediately bearing the full EMI burden. But if possession is delayed, the arrangement can leave buyers exposed to prolonged uncertainty while their housing finance obligations and the underlying property purchase remain unresolved.

According to the officials cited by ETRealty, the CBI investigation found that possession of the homes had not been given even after the passage of several years in the cases being examined.

The ED's searches mark the latest stage of the investigation. A search under the PMLA does not by itself establish guilt, and the allegations against the companies and other parties will have to be established through the legal process.

The case also puts renewed attention on the risks surrounding developer-led financing arrangements. While subvention schemes can reduce the initial cash-flow burden for buyers, the structure involves multiple parties and depends heavily on the developer meeting its construction and possession commitments.

For buyers considering similar offers, the case underlines why the headline benefit of deferred EMIs cannot be assessed separately from the project's delivery record, approvals, financing structure and the terms of the buyer's loan agreement.

The ED investigation will now determine whether the alleged transactions generated proceeds of crime and whether further action is warranted under the PMLA.

Sources https://realty.economictimes.indiatimes.com/news/regulatory/enforcement-directorate-conducts-raids-in-ncr-in-homebuyers-fraud-case/133238941