Payment schemes such as 20:80 introduced by developers have made some impact in offloading inventories. Its success hinges on the price point and most important, track record in delivery, say a cross-section of experts
Developers, saddled with huge unsold inventories, are wooing hesitant buyers with seemingly attractive payment schemes.
Earlier, buyers kept off the sales counter as the price points were high, and the global slowdown resulted in delayed deliveries, and in many cases, projects not taking off at all. While price points do not look like they would witness a correction, developers are aggressively advertising payment schemes, the most popular being the 20:80 scheme and its variants such as the 25:75 or 35:65, with an aim to keep their sales counters abuzz with activity.
Under this scheme, the buyer pays 20 per cent of the unit price upfront and 80 per cent on possession, with the EMIs (equated monthly installments) in between being handled by the developers. This is usually advertised as ‘no pre-EMIs’ for a certain duration. Such developers undertake to pay the EMIs for up to two years, with the assurance that the buyer will get possession of the unit by then.
For example, if a flat costs Rs 40 lakh, the bank will pay Rs 30 lakh (80 per cent of cost) to the developer, say at an interest rate of 10 or 11 per cent. The developer will pay around Rs 25,000 per month to the bank for two years.
It is a huge gamble for developers who are taking the responsibility for interest payments on behalf of the buyer for a designated period. For some developers, however, it appears the move is yielding dividends. Enquiries are increasing, which has led to increased sales. “Deferred payment schemes like 20:80 and their variants have emerged as a major tool to stimulate sales. In Delhi NCR, developers like CHD, Indiabulls, Nirmal Lifestyle and Bdi, are offering the subvention scheme, which has resulted in improving their sales,” says Rohit Kumar, head of India research at DTZ, a property consultancy.
Raheja Developers, a leading player in the Delhi NCR market offers 50:50 payment schemes for some projects under development, says sales have picked up. “Sales have gone up by 50 per cent in the Gurgaon market, after the implementation of this scheme,” says Harinder Dhillon, a spokesperson for the company.
“Schemes like 20:80 have existed in the market, but they started becoming