Developers claims RBI’s new policy will reduce property transactions

Developers claims RBI’s new policy will reduce property transactions

According to them 80:20 will bring negative emotionalism in the mind of the developers and buyers, which will result in more slowdown of the transaction.

Real estate industry is currently witnessing many hurdles and cries, builders and developers are worried about the current market stability, which is sinking down and adding more complaints in the realty market, Reserve Bank of India’s policy that banks should disburse loans in installments in coupling with the level of construction work completed. The Realtor are claiming the RBI’s decision as a huge drawback for the real estate industry. According to them this will bring negative emotionalism in the mind of the developers and buyers, which will result in more slowdown of the transaction.

            As per the 80:20 scheme the buyers need to pay 20 percent of the property price and remaining 80 percent were been paid by bank to the builder, lending as a bank loan to the buyer. But, as per the new policy the buyer has to pay 20 percent as the booking amount and remaining amount banks will pay to the builders as per the stage of constructions. This will result in to lack of investment and financial crises for the builders and developers. As if the real estate sector is facing liquidity crises.

            “The decision has come at a time when the home interest rates are already very high and the property prices have increased due to escalating cost of raw materials; it will add to the woes of the customers. The common man’s chance to own a dream home with minimuminvestment will be affected” said RK Arora, CMD Super tech Group.

            This will affect the buyers and developers both and widely to the buyers. This will result in reduction in the number of investors in the sector, as buyers will lack with the investment money and it may also leave many projects in lurch due to lack of finance with developers to complete the construction, as it will be difficult for them to acquire investments.

                                                                                                       

            “Statistics says that nearly 20% of loan disbursements for the new flats in Mumbai are under such schemes. There have been reactions coming in way as it’s obvious that the developers are against the notifications. It’s ironic that the government believes the middle class, which avails of loans to buy its dream home, to be a risk, but not the five major industrial houses that, between them, have an exposure of Rs.5 lakh crore of public money. The RBI obviously thinks it is extremely important for it to stifle the economic growth of a company by taking such decisions,” said Vimal Shah, managing director of Hubtown and president of the Maharashtra Chamber of Housing Industry.”

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