Mumbai: In a bid to beat their blues in the slackened realty market, developers in Mumbai are trying to make the most of the festive season by dangling lucrative easy payment schemes. While owing an apartment in Mumbai with a ticket price of anywhere over Rs 1 crore by paying nothing more than 10 per cent of the price until possession may seem like an irresistible deal, analysts caution buyers against signing on the dotted lines before reading the fine print.
The algorithms vary from the 80:20, 75:25, 60:40 schemes to the recent spate of the seemingly lucrative 10:80:10 schemes.
Over the last couple of months, a large number of developers have announced the 10:80:10 scheme wherein buyers are required to pay merely 10 per cent of the apartment cost at the time of booking while the developer will pay the home loan interest to the bank until the time of fit-outs or possession. For instance, the latest phase of the 33-acre Ariisto Heaven project in Mulund offers buyers two-bedroom apartments costing upward of Rs 1.60 crore and three-bedroom apartments for over Rs 2.60 crore at a down payment of Rs 11 to 15 lakh in addition to the stamp duty, registration and other fees.
Several other developers such as Sheth creators’ Andheri project, Rajesh Lifespaces’ Powai and Mulund project, Gurukrupa Developers’ Malad project and Rustomjee’s Thane project offer the 10:80:10 options while others such as Dosti group, Damji Shamji Shah, Mayfair Housing, Indiabulls Real Estate, Neptune Developers and Runwal developers have on offer other variations of easy payments.
The 10: 80:10 scheme is, however, just the latest in the slew of interest subvention schemes that the Reserve Bank of India tried to clamp down on last year on the grounds that it exposes both the buyer and banks to greater risks while allowing easy liquidity to cash-strapped developers .
“The scheme benefits developers as instead of paying the high interest rate that is levied on construction financing from banks, projects are financed through homes loans that are available at a lower interest rate of 10 per cent to individual homes buyers,” said Abhishek Ranganathan from the financial services company Phillip Capital India.
The sudden dependence of builders on end-user’s money is also owing to the fact that investors who used to fund projects by booking a specific number of apartments even before a project was officially launched are now refraining from putting their money on real estate.
Analysts further point out that the interest cost is ultimately borne by the buyer himself. “There are various ways that developers factor in the interest paid by them in the sale price of the apartment. It could be by inflating the total cost, or by increasing the built-up area or by hiking the price of car park or floor rise,” said realty agent Sandeep Sadh.