Housing market has been facing a slowdown for a while. There are several instances where house owners sit on houses fetching them lesser money than what they spent to buy it. To woo customers in such a market, developers use various terms in ads, SMSes and emails. This is what they mean and why you shouldn’t fall for it.

No stamp duty

When you buy a house, you have to pay a stamp duty to register the house in your name.It is charged by the state government and not by the builder. The amount usually varies from state to state. For instance, in Mumbai, the stamp duty is around 6% of the value of the property.

What it means: If your builder is saying that the house is without stamp duty, he is basically going to pay it on your behalf and has included in the total cost of the property. “The composite cost is inclusive of stamp duty. There is no direct discount. They have just incorporated all the additional cost in the prices," Pankaj Kapoor MD at Liases Foras, a real estate advisory.

No GST impact

The real estate sector came under the goods and services (GST) regime after it got implemented in the country. “For completed projects, there is no GST. For under-constructed project, you have to pay 12% GST," said Samir Jasuja, chief executive officer and founder, PropEquity.

What it means: If the builder is selling you a completed project or if the property has got completion certificate, then you are not supposed to be charged GST. If the house doesn’t fall under these categories and still the developer says he is waiving GST, it means he is factoring the GST cost in the total amount. “Builders also have an input credit. When he says GST is inclusive, builder also gets input credit. So effective cost in the hand of the builder generally comes to 6-6.5%," said Kapoor.

RERA-approved projects

Many real estate developers and agents mention that their project is Rera-approved. Rera or Real Estate (Regulation and Development) Act came into effect on 1 May 2016. It is mandatory for a developer to sell Rera-approved projects.

What it means: “Anything the developer is marketing has to be Rera-approved. Some project that went into completion or more than partially completed before the Act came into effect doesn’t require Rera approval. The builders are writing Rera-approved just to get comfort level with homebuyers and to show that money goes their escrow account,"said Jasuja.

Zero cost EMI

When you take loan to buy a house, you have to pay an EMI. To attract customers, the builder will pay the EMI till the completion of the project. Though you are taking the loan on the property, the builder decides to pay on your behalf. Why would the developer pay money from his pocket?

What it means: “It is a marketing gimmick. For instance, the builder will say ‘for the zero EMI scheme the cost of the property is Rs4,000 per sq. ft. But if you don’t want to take zero EMI, you pay Rs3,800 per sq. ft.’ Here the builder is taking the advantage of paying on your behalf, so that he can take more money from you later," said Jasuja

Freebies

You must have come across sales pitch such as no extra cost for floor-rise, club house, parking or other amenities. Some builders are also offering gold coins,a car and even tickets to an overseas destination with the flat your purchase.

What it means: “It is all part of the price correction.They have earlier sold the property at a higher price. Right now they are trying to maintain the same price per sqft. But additional cost for amenities that varies between 14% and 17%, builders have started offering that at a discount," said Kapoor. They are not offering you freebies, but just a part of price correction.

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