Buying a house? Mitigate risk with possession-linked plan

With sales in the real estate sector slowing down, developers are coming up with a variety of attractive offers to persuade customers to buy. One innovation that the current slowdown has spawned is the possession linked payment (PLP) plan. Until recently, the most popular plan was the construction linked payment (CLP). Here, the payment to developer, either by the buyer or the bank from which the loan is taken, is linked to construction milestones.

While this plan appears attractive, developers have found a way to circumvent it. By the time the super-structure is ready, the buyer or his bank has paid 80-90% of the apartment's cost. Next comes the stage when the interior and finishing have to be done. Normally, this stage should take between six months and one year. It is at this stage that the developer begins to delay the project, stretching it from two to five years. Having collected most of the apartment's cost, he now diverts the buyer .. 

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