Video: Don’t fall for freebies while buying property in India, warns top developer

“Nothing in this world comes free, so whenever there is a freebie it means there is a catch,” said Usha S. Varanasi, AVP Middle East Sales and Operations, Prestige Group. “These days not many developers or real estate companies are coming up with such freebies. By large, I think that is stopped.”

She added that developers have become very careful with incentives ever since the Reserve Bank of India barred the 20:80 scheme.

Developers are, however, more inclined to offer properties at an affordable and reasonable price over others.

What is a 20:80 scheme?

Under these schemes, the buyer books an under-construction property by making a down payment of 20 per cent of the cost of the property, and takes a home loan for the rest of the amount.

In 2013, the RBI had advised banks to exercise caution while financing interest subvention schemes “in view of the higher risks associated with such lump-sum disbursal of sanctioned housing loans and customer suitability issues”.

It had advised that disbursal of housing loans sanctioned to buyers should be linked to the stages of construction of the housing projects and that upfront disbursal should not be made in case of incomplete or under-construction or greenfield housing projects.

Other precautions

Varanasi said that in the resale market, NRIs should be mindful while dealing with a developer or agencies. She recommends working with reputed developers and agencies to ensure smooth transactions. “Getting your lawyer involved and maintaining a record is very important,” said Varanasi.

Upcoming projects vs ready-to-move

According to Varanasi, upcoming projects will be a lot cheaper than the ready-to-move ones simply because the latter have already factored in some appreciation in value. “The project when it is launched, is at a certain price and then there is appreciation over the two-or-three year window that you know that it takes to complete the project,” said Varanasi. “Ready-to-move is more of a tangible project.”

If you want to feel ‘psychologically assured’, ready-to-move is what you should choose, she said. “This is because it is there and you can do whatever you want with the property, rent it, sell it, or whatever,” said Varanasi. “But under construction gives you that price advantage. So the choice is really yours.”

She recommends that if you have the money you should go in for a ready-to-move. If you are looking for appreciation, you can go in for a new construction. Since one doesn’t have to pay everything upfront, it’s also easier on the pocket.