The real estate sector which is reeling under sluggish environment with a huge pile of inventory, prices bottoming out and hence reduced margins from last several years is leaving no stone unturned to revive the industry. Though early signs of recovery are visible in mid and affordable housing segment post the scrapping of high value currency notes and implementation of RERA and GST. This festive season apart from the usual cash and non-cash discounts, interest subvention scheme; other offers on the roll-out include waiver of GST charges, no EMI until possession.
Now, potential home buyers need to check whether these offers save substantial costs for them to make this high value purchase decision right away.
1. Interest subvention scheme and other flexible payment options: Under the subvention scheme, real estate developer takes on the responsibility to service buyer's interest i.e. in case the bank charges 9%, the developer agrees to service 4% interest for the property buyer during the construction phase of the project. But in case the project gets delayed, you may end up paying higher EMI towards the loan.
Usually the property with an interest subvention scheme is available at a higher price in comparison to other property for which full payment is made and the differential ranges between Rs. 500- 1000 per sq. ft.
Also, developers are allowing buyers to pay only 7-8% of the property price and the rest can be tendered at the time of possession. At the same time they are also offering such options where they don't need to service any EMI until possession.
2. GST waiver: GST has reduced the cost of construction for developers as they can now claim input credits in respect of services and input material. Further GST @ 12% applies only to under-construction projects. So, ready to move in accommodations do not attract GST payments. Therefore, while zeroing in on a property deal ensure that you are not being lured wrongly with a GST waiver on such a property.
3. Cash and Non-cash discounts: Such discounts are offered at some special time as during the ongoing festive season and are a limited period offer for select housing units. The monetary value is clearly stated and can be either as lump sum amount or as a discount per sq. ft. of the property area.
Other charges such as stamp duty and registration charges are also being paid by the developers on behalf of the property buyer. But here also you need to act cautiously as the discount could be misleading and it could be the case that developer has inflated the original cost of the property and then offered you such a discount.
The cost of freebies offered with the property purchase as cited by experts are directly or indirectly included in the basic property price or it is just 1-8% of the total property cost. So , any freebie offering with the housing deal should not be the sole criterion for your buying decision.