Booking a flat? Avoid those 'lucrative' finance schemes

If you are investing in an apartment after seeing the lucrative schemes that builders are offering like minimum down payment you may not get the home that you are booking on time According to real estate industry experts builders might reroute the funds they collect for booking an apartment to some other avenues rather than use it for constructing the building for which you have paidTherersquos work in progress but will your apartment be ready on time File pic for representationEven top builders suggest some caution but claim that the delay in construction of a particular project may not only be caused due to a paucity of funds but also because of various issues which involve permissions from the government And with no clarity on the Mumbai Development Plan DP builders claim delay in projects is imminentThere are many schemes that builders have come up with for example a builder based in the western suburbs has launched a scheme where you pay just Rs 3 lakh for the project and shell out the balance amount after a few yearsNot only this there are schemes for flats in the central suburbs asking home buyers to pay only 20 per cent of the project cost at the time of booking with the balance payable at the time of possessionWhile these schemes may sound good to the pocket the guarantee of the project being delivered on time actually doesnrsquot exist Explaining the phenomenon Dr Sanjay Chaturvedi executive editor of Accommodation Times a real estate newspaper told midday ldquoOver the past few years with the heavy slump in the industry builders have a lot of pending bills and they are desperate to generate money so that they can pay upThe fear is correct that if buyers pay up will the builder use the funds for the project for which buyers have paid the money There have been many cases in the past where builders have taken money for a particular project from home buyersBut after a gap of three to four years when the builderrsquos need for money is over he shelves the project and pays a minimal interest on the money and returns it to the home buyer So before investing in property the buyer should pay attention to these detailsrdquoProperty brokers and builders themselves suggest that home buyers should conduct a thorough check before investing in any property Prakash Rohera of Karma Realtors said ldquoDo not fall for the marketing schemes that a builder is indulging in see the documentation consult your property lawyer and broker before investing in propertyDiverting money is an ageold trick Hence people should run a background checks on the builder to whom they are entrusting their moneyrdquoBuilder speakBuilders claim that delay in a project cannot be only attributed to paucity of funds they claim that there could be other reasons for the same Pravin Doshi past president of the Maharashtra Chamber of Housing Industry MCHI and owner of Acme Realty a real estate company said ldquoA buyer should invest in reputed builders because they have a lot at stake to complete and deliver the projectHowever a delay in a project could be for various reasons and not just because of the builderrdquo Rajesh Vardhan MD of Vardhaman Developers added ldquoItrsquos accepted that builders earlier used to divert funds from one project to another but now the delay in handing over the possession of a project is something that is not in our handsBuilders try their best but then look at the government the change in policies and getting approval is the reason why projects get delayedrdquo Another builder claimed ldquoFor the past few months projects arenrsquot moving All of a sudden if a road has come up in my project how do I go ahead with its construction The DP isnrsquot final the BMC came up with new development control rules just two years backPeople always think the builder is at fault but never see the real reasons behind the delay Builders do transfer funds but then we do not have many options with us and hence seek funds from home buyersrdquoAccording to Chaturvedi builders are dependent on funds from home buyers and private lenders as institutionalised funding isnrsquot available in the industry Hence builders are focussing more on raising money from buyers directly