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From Cricket's 20-20, to Real Estate's 20-80

Friday 20 February 2009 - Mumbai Mirror

When residential realty sales do not show a major improvement, despite real estate price corrections and home loan interest rates lowering to single digits, it is time for some innovative options. kamlesh pandya looks up one such scheme being offered by some developers.

What worries a home seeker and causes him to delay his home purchase? Developer Vijay Wadhwa says it all boils down to three issues. First: not being sure about the date of possession; second: the uncertain job market and third: high home loan interest rates. "Once we understood what the worry areas were, we went to work on addressing these issues and came up with the '20-80' scheme, where the buyer pays just 20 per cent at the time of booking," he says.

The scheme basically relieves the buyer of pre-EMI payments until possession, when the buyer can either pay up the balance 80 per cent or opt for a loan. Wadhwa expects the scheme to be a success. "The biggest plus point is that the developer gets the balance 80 per cent only on handing over possession. This serves as a motivation to ensure prompt possession on the builder's part, which should work out just fine for the buyer," explains Wadhwa.

Economists suggest that the slowdown could mean a troubled phase across the next year and a half. The 20-80 scheme neatly side steps this troubled period. "We have tied up with Axis Bank and State Bank of India and will pay interest to the buyer in the period from booking to taking possession," he adds.

On a slightly different note, Ashok Chhajer of Navi Mumbai-based Arihant Universal has a slightly different variation of this scheme - he offers the '30-70' scheme. "The scheme is for my project, Arihant Aradhana at Kharghar, where the buyer pays 30 per cent of the total cost of the flat. The next talk of remaining payments is at the time of possession, 18 to 24 months down the line," he says, pointing out that in his scheme, the buyer does not even have to go in for a loan during the period from booking to possession. "The scheme is not a pre-EMI holiday scheme. If the buyer wants to avail of a home loan, he needs to do so only when it is possession time," he explains, confident that the scheme will help tide over the challenging economic times and provide confidence to a buyer that he will get possession on time.

In Neral, the Nirman Group offers a similar option. "Buyers pay Rs one lakh as the initial amount and the rest after possession (prices start at Rs 3.99 lakh for a 235 sq ft home). The scheme is tailored to suit the common man looking out for affordable homes," says Ajit Marathe, director, Nirman Realtors and Developers. In effect, instead of taking a home loan, the buyer gets the option to pay the balance in installments.

Manju Yagnik, vice-chairman, Nahar Group, says the 20-80 scheme launched in collaboration with HDFC some years ago, has played a major role in the success of the project, Nahar Amrit Shakti, near Powai. Pointing out that few others who tried to imitate the scheme were not successful, she cautions, "It depends upon the project, price of the apartment, savings on the pre-EMI and also the buyer's willingness to buy. Hopefully, the scheme would be a success in these challenging economic times," she adds.

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