* It offers relief to potential house buyers by halving the initial down payment commitment to 10% from 20% required under the popular 20:80 scheme.
* Residential property prices in Mumbai have increased steadily by 66% cent from 2009 to 2013.
If you are among those who have been forced to shelve plans to buy a home owing to the high down payment requirements or inability to bear the combined payment burden of rent and housing loan EMI (Equated Monthly Installment), there is help at hand.
Enter the 10:80:10 scheme wherein the home buyer has to pay up only 10% upfront for booking his flat, 80% via bank loan during the period of construction and the final 10% after getting possession of the flat or house.
This is done through mutual understanding between the banks and the developers, whereby the buyer and the developer together stump up the 20 per cent margin required for getting a bank loan.
The USP of this marketing scheme is that it offers relief to potential house buyers by halving the initial down payment commitment to 10% from 20% required under the popular 20:80 scheme.
The bank / housing finance company does not take a hit as the builder makes good the balance 10%.
Tata Housing Development Company has announced a 10: 80:10 scheme for its residential project Amantra on the Thane - Kalyan road in July, 2013. It has tied up with HDFC, Axis Bank & Tata Capital for rolling out the scheme. Priced at Rs. 6,050 per sq. ft, the project offers 1,400 2- 4 BHK flats between 800 and 2,000 sq ft and is expected to be completed in three (3) years.
Mr. Rajeeb Dash, Head (Marketing), Tata Housing Development Company said, ''The scheme could be extended to other select Tata Housing projects depending on the response to the Kalyan project. The main benefit of this scheme is that it does not block the buyer’s money entirely & it helps us attract end users who were otherwise not interested as they were unable to pay both their EMI & rentals. Monsoon time is anyway a time when realty market slows down so it is a good time for us to focus on marketing strategies such as this aimed at end users..This 10:80:10 Home Loan Scheme would help buyers save 50% of the interest cost,” he added.
Nirmal Lifestyle too is offering a similar scheme, only this one is 10:10:80, via a tie-up with ICICI Bank, HDFC & India Bulls Finance for its Sports City project at L.B.S. Road, Thane. Under this, buyers can pay 10% down payment on booking, another 10% on start of construction and the rest 80% on a slab basis as per the stage of construction.
The project has 2, 3 & 4 BHK houses priced at Rs. 12,006 per square feet and is expected to be complete by end 2016.
Mr. Ashutosh Limaye, Head Residential Services, Jones Lang Lasalle said, ''Such marketing schemes are a reflection of the drop in sales in the Thane - Kalyan region of Mumbai If a developer has a large project the need for cash is more & adds to the sales pressure. Moreover, while it is important for buyers to save money, for banks and a developer like Tata Housing the hit taken is not much as they gain more customers”.
Dr Samantak Das, Head (Research), Knight Frank said, ''That for a sustained absorption level in residential housing, affordability of consumers & confidence in economic conditions are more crucial factors than such marketing schemes which “only help attain certain spikes in absorption.”
Mr. Ravi Ahuja, Executive Director, Cushman & Wakefield, said, “Though it helps developers make temporary sales & replace high cost debt with low cost debt, it is time developers look at their poor sales & reduce prices directly. This will encourage & motivate buyers who are waiting and help meet the built-up demand.”
According to Jones Lang Lasalle, going by the parameters of lack of affordability over an extended period & surfeit of unsold inventory, the Mumbai property market should have corrected three years (3) ago. On the contrary, residential property prices in Mumbai have increased steadily by 66% cent from 2009 to 2013.
In Thane, the increase has been even higher at 70% while Navi Mumbai has seen a staggering escalation of 74%, the report also said.
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