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20:80 Subvention Schemes A Win -Win For Buyers Developers

Posted by Admin on August, 10, 2013

At a time when project delays have become normal and buyers have to bear the double whammy of paying rent of existing house and equated monthly installments (EMI) for property under construction, subvention schemes appear to come up as a potential alternative.

Under a subvention scheme, a buyer is expected to pay a part of the total cost as down payment and pay the rest after getting the possession. Generally, this down payment is 20 per cent of the total amount. Therefore, on buying an apartment for Rs 50 lakh, for instance, you have to arrange for Rs 10 lakh at the beginning, and then the rest could be paid once you get the possession.

A number of real estate developers have launched such schemes in a bid to attract buyers. “A subvention scheme boosts consumer confidence at a time when salaries are increasing at a modest pace and home loans are also not affordable by many people. It significantly reduces home purchase costs and extends substantial savings to property buyers,” said a developer.

The proposition ensures future cash flow for a developer, at the one end, and rules out the possibilities of collective burden of rent and EMIs on the buyer, at the other. “The biggest benefit of such schemes is that they help sell the inventory, get a database of prospective buyers,” said a Leading Group, adding, “sales under subvention schemes also help determine future cash flows for a developer while a buyer can reap in benefits of price appreciation during the construction period and enjoy higher returns on the partial, down payment after a few years.”

Notably, a residential real estate project generally takes 2-5 years to complete, and a buyer has to pay a booking amount anywhere in the range of 8-15 per cent of the total price of the unit. Paying 20 per cent down payment under a subvention scheme, in this case, could be a win-win situation for both buyers and developers.

Also to Note that , one has to be very careful before going for any suvention scheme as it will be useful to plan the buyer's financial in most easy way. further it will give a clear picture as to how it is going to be binding on buyer and developer, so therfore one should take a expert opinion before signing the agreement.

This entry was posted on August, 10, 2013 at 13 : 02 pm and is filed under Buyers Guide to Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response from your own site.

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