Withdrawal Of Subvention Scheme May Not Hit Real Estate Industry Too Hard: ANAROCK

New Delhi: Real estate industry is unlikely to be impacted in a big way with by the recent national Housing Bank’s directive to disallow housing finance companies (HFCs) from lending under subvention schemes as only a handful of project are sold by developers with subvention schemes.

Out of the 280 projects that were launched in the firs quarter of current fiscal (April-June quarter of 2019), only 23 projects or about eight percent were sold through with subvention schemes. These 23 projects have a total of 7,620 housing units which is around 11 percent of the total 69,000 units launched in the quarter, data by ANAROCK Property Consultants shows.

"The impact of the ban on subvention schemes is minimal primarily because as early as 2013, the RBI had already curbed banks' upfront disbursement to developers offering such schemes for under-construction or greenfield projects. Banks were directed to stick to construction-linked disbursals," said ANAROCK Chairman Anuj Puri.

However, small developers that depended on subvention schemes to sell their project will have to be creative from now with differentiated USPs to sell market their projects.

A subvention scheme is one where the home buyers pays 20-25 percent of the property price and the developers pays the rest of the money to lender which can be a bank or a HFC on behalf of the buyer until possession. Some the popular subvention schemes that were there in the market included 20:80 and 25:75 schemes.