Come festival season, property developers invariably try to attract home buyers with discounts and innovative payment schemes. Not a year goes by when developers don’t offer freebies on the likes of wardrobes, cash discount and creative bonus such as rent payment until possession, during this period
With the housing market picking up very slowly, and a lot of uncertainties, there is caution on both sides — developers and buyers. For one, developers are reeling under input price increase and a tight financial market. So, unlike other years, there are not too many widely advertised offers and the few big ones have been more project-specific. Also, tepid property price growth has removed a lot of speculation from the market, leaving mainly the end-users. These buyers tend to be more long-term focused and are not taken in by short-term attractions.
That said, there are still deals in the market and if you are looking for a home, how much weight should you give to the offers?
Interest lock-in
With increasing interest rate top of mind for buyers, some developers are trying to clinch the chase by offering reduced and fixed interest rate. One example is Lodha Group that is holding out a fixed interest rate of 6.99 per cent till June 2024. For reference, market rates are a little over 8 per cent. Another initiative, from Tata Realty, offered around Independence day, woos buyers with interest rate of 3.5 per cent for 12 months on 9 projects of Tata Housing across 7 cities. Last year, during the festive season, the company had offered 3.99 per cent flat interest rate for one year on 10 projects.
Other interesting rate offers have also been a 2021-only deal. For instance, low or fixed home loan interest rates were aplenty from banks last festive season. But the only one in the market this year seems to be from HDFC (through HDFC Bank’s Festive Treats) at 6.7 per cent interest rate.
In this backdrop, these few deals available now may merit attention. Check out who the loan provider is — is it any bank of your choice (usually the case) or if there are any limitations to choosing — such as a shorter list provided by the developer. Also, evaluate other terms such as processing fees and additional charges on loan transfer.
Delayed payment
If you are considering buying in projects that are under-construction, there may be better deals awaiting. Given the risks in completion and the large unsold inventory, buyer preference has been clearly for ready-to-move-in apartments. And developers are offering incentives, such as paying rent, to attract buyers right at project launch.
One such is builder subvention scheme where you may only pay 20 per cent of the amount on booking and the rest is due on handover. However, there are also variations where the buyer has a loan agreement with a bank, which pays the builder through the construction progress. The developer pays interest dues until possession and the EMI is then taken over by the buyer.
These schemes are often complex and only work with very credible and financially sound developers but are frequently offered by those who are unable to raise capital. While completion risks are somewhat reduced with RERA now, they are not fully eliminated. So, evaluate the price appreciation benefit, or any other reason you have to buy an under-construction property, against the developer’s credibility.
Other deals
Besides deals from individual developers, platforms such as housing.com have festive home sale events such as the Mega Home-Utsav. These allow you to look at projects from many developers and avail discounts. For example, you may get deals such as complete stamp duty waiver or others such as certain per cent off on stamp duty for women home buyers. Apartment may be booked without a lot of down-payment — for example, paying as low as ₹21,000. Developers may also add freebies such as car park, electric bike and cash discounts of up to a few lakhs.
However, unless you have done your research and are sure of buying in these projects, it is best to avoid rushing to book. It is likely that more discounts will be offered around new year.
Likewise, there may be a bit of pressure to close sale this season and developers may sweeten the deal with offers. For non-monetary items such as modular kitchen, evaluate the value to see if it is worth the trade-off.
With home loans, some banks such as ICICI offer 50 per cent discount on processing fee or a low fee for balance transfer. Likewise, HDFC Bank offers a flat processing fee of ₹2,500 plus taxes for select government employees. A home loan is a long-term commitment; be sure to check all the terms of the loan and the overall cash outgo during the tenure, don’t go by just the immediate benefit.
There are some simpler deals to choose from. One such is referral fee of up to 2 per cent of the unit cost that some developers are offering. If you have done your research and are convinced about buying a home, it may be worthwhile to refer friends or family tothe same project. It is a win-win, as the developer may be paying a higher commission to brokers or for their own cost of sale.
The author is an independent financial consultant