Pune: A Pune-based developer may have a solution—at least temporary—for the hundreds of realty firms faced with dwindling demand for homes: Rent out apartments and hard-sell a purchase option to the tenants.
Mont Vert Homes has kicked off a ‘Rent Today and Own Tomorrow’ campaign, inviting potential buyers to rent apartments of their choice on 11-month contracts, with the option of buying the flat anytime in the interim.
“Paying rent hurts and is often considered a waste of money, so what we are telling our customer is that once he decides to buy the apartment, we adjust the rent paid towards the down payment for the house. That way, he has not lost the rent amount,” said Manish Kaneria, director of Mont Vert Homes.
At the end of the 11 months, the tenant is under no obligation to buy the apartment. The developer is sweetening the deal by saying the tenant can get his rent back if he brings in another customer to buy the apartment. “We are telling the renter that we are willing to transfer his rent as down payment towards the other client’s purchase and he could retrieve the money from that person,” Kaneria added. The rent, Kaneria added, would be set at lower-than-market rates but did not say by how much.
For the developer, even renting out a two-bedroom apartment for Rs12,000 a month or a three-bedroom one for Rs15,000, is better than holding on to inventory that does not deliver any returns. The apartments—located at Baner and Pashan near Hinjewadi, an area that has a concentration of software firms—cost around Rs35 lakh for a two-bedroom apartment and Rs50 lakh for a three-bedroom flat
Mont Vert, which has been in the realty business for at least two decades now, will value the apartment on a monthly basis to reflect the fast-correcting property prices in the city, so that tenants can decide whether to buy a home or not. Home prices have dropped 15% to 25% already in Pune, but expectations are that they will fall further.
Developers sold between 50,000 and 65,000 new apartments in Pune annually in recent years when the economy was booming. Sales will lag significantly behind those numbers in 2009, according to Jayant Kaneria, another director of Mont Vert. Sales had skidded to “near-zero levels” between August and December. “It has now revived slightly with single digit sales after the price corrections but the situation is unlikely to improve before July,” he said.