NEW DELHI: You may get a chance to own a home, without actually buying it. The government is planning to bring in the tried and tested American concept of “equity homes” to India.

According to the concept, financial institutions (FIs) buy out projects from developers and rent them to end users. In addition to the agreed rent, the end user pays a certain premium to the FI. Over a period of time, once the price of the property is recovered, the tenant gets the total ownership. Though the overall amount that the end user pays will remain more or less the same as in the case of normal home loans, what may come as a huge respite is the one-time down payment.

While down payments are as high as 15-20% in case of home loans, its just about 5% for “equity homes”. Also, unlike usual loans, in this case the 5% one-time payment will just serve as a security, and the tenant can claim it back in case he decides to move out of the contract midway. What’s more, this property will be an asset for the tenant who can mortgage this and get loans as “home equity” from other banks and FIs. The commerce ministry is learnt to have circulated the proposal for the same to various developers, banks and financial institutions, seeking their recommendations.

“We are in talks with various banks and lending institutions to make this operation feasible in the Indian housing scenario. Consumers will have another great advantage with the fact that he will not actually have to get into the intricacies of procuring the loan,” said a government official. “This is a welcome development as far as providing relief to the end-users of the property from the initial pressure of large-size down payment.

Here, the structure of the loan will remain the same, but at the same time, there would be initial affordability for end-users,” Unitech managing director Sanjay Chandra said.

“There is also an inherent advantage due to the absence of any binding. If a couple of years down the line the tenant feels that the option is not viable, he can leave it.”