All posts by Narendhar Singareddy

Buying a house? Here’s the ultimate checklist to help ease the process.

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There are so many checklists floating around the Internet, one gets swamped in the sheer amount of information and confusion reigns supreme. So, we decided to create the mother of all checklists – complete with almost every kind of tip imaginable.

  • Conduct a little research on the builder whose property you are going to buy. Check if he is reputable and his presence in the real estate market. It would be wise to see if he has all the required documents to develop a project in that area, viz. land records, construction clearances, approved building and layout plans, land use certificate, master plan of the area, and no objection certificates from various utility boards.
  • Estimate the total cost of ownership, including parking charges, stamp duty, registration charges, new furniture / furnishings that a customer may have to purchase. All this could contribute to almost 5-20 percent of the bare cost of the apartment.
  • It is important to understand about the final usable area of the apartment, especially in case of apartments under construction. Most of the times, the sale would be on super-built up area. Consumers need to be comfortable with the liveable area they will finally get to use.
  • Estimate the total cost of running the home. This will include maintenance charges, property tax, and increased commuting charges as compared to your present place. Please ensure that this fits in your monthly budget.
  • It’s equally important to check whether the building is pet friendly. Societies and apartment complexes cannot object to residents having pets. If you have pets, then this circular will help in case any arguments break out over having pets in your home.
  • If you are buying the apartment as an investment, think through the profile of your typical tenant and whether the location of your apartment is good enough for such a tenant. If it is a commuting couple, see if the apartment is close to the railway station
  • Speak with the watchman of the neighbouring building, in case the building you want buy the flat in is under construction, to find out the situation of water supply, electricity supply, availability of domestic help, level of security and safety, neighbourhood grocery stores, deliveries from restaurants, gyms, day care centres, hospitals and schools, depending on your life situation, and your need.
  • Find the average range of prices in the neighbourhood by asking around. One should speak to people in 2-3 neighbouring buildings to get an idea. There could be a range of 5-10 percent difference even within neighbouring buildings, depending on quality of construction, exact configuration of apartment, etc.
  • If you are buying an under-construction apartment, then visit buildings already delivered by the same builder to check out on quality of his construction, assuming that he would deliver minimum quality here. You can ask occupants of the older buildings on whether the building was developed on time, or whether the developers handed over the building to the society amicably.

To sum it up, buying an apartment is possibly the biggest decision you would take, ranking after your marriage and having a child. You have a responsibility towards yourself and towards your family and doing all the above due diligence before buying your apartment, will ensure that you get what you expect.

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6 reasons why you should buy a house

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Your home is your haven. It is where all joys and sorrows are experienced; all trials and tribulations taken care of; all troubles laid to rest. Some seek security, while some seek comfort, and some consider it as a necessary tool to be considered of a certain social status amongst peers.

Given the soaring prices of real estate, people are wont to shy away from investing that kind of money.

So, here are 6 reasons why you ought to buy a house instead of renting one.

It does not tie you down

The common misconception doing the rounds is – if you buy a house in a certain city, you are tied down for life, while encumbered with a financial commitment for most of it. We can understand from where this misconception stems. Housing loans are tenured for 20 to 25 years, and people believe that they need to pay off the whole loan before they can sell the property if and when they have to move. This is quite ridiculous, for you can sell your property at any sweet time it pleases you, irrespective of whether the loan is paid off.

Imagine this: you buy a property worth 15 lakhs and get a loan of the same amount. After 5 years, you decide to shift base (or are in desperate need of money) and need to sell off the house. You can do that without having to wait for the tenure of the loan to get over. You can easily sell your house off at the ongoing rate (it would have appreciated in 5 years), pay the loan amount to the bank, and pocket the profits!

It ain’t only for old people

The availability of easy financing options has made it easier to own your dream home. It is no longer necessary to wait till your 40s and 50s to save enough money to be able to acquire the property of your choice. It is now possible to buy a house in your 20s and own a house sans the mortgages in your 50s (or earlier). You need to be prudent in your selection of a home loan provider – someone who offers the flexibility of tailoring your EMIs to suit your present and future income patterns.

Your roof, your rules

The purchase of a house ensures you have a space of your own – a respite after a long day at work and a tiresome commute. Your own nest offers a sense of security in a world that is spiraling out of control, and its comfort is irreplaceable. No one can dictate terms, tell you whom to invite and whom not to, impose restrictions on your comings and goings, and try to curtail your freedom. Having a house of your own frees you from the invisible shackles that landlords place you in, simultaneously getting rid of the constant follow-ups that are a necessity if and when something needs to be fixed in the house.

Your rent can go towards paying off your EMIs

Paying rent every month, year after year, is just an expenditure that you are never going to get back. You could use your rent money to help pay off the home loan EMIs on your new home. Additionally, with every EMI you pay, your equity in your home goes up! There are a number of properties (hyperlink Sitara to http://www.janapriya.com/projects-sainikpuri-sitara.html) that cost enough to ensure your EMIs do not rise above the rent you currently pay!

Tax benefits

The principal amount of a home loan and the interest incurred can fetch you attractive tax breaks. Renting a place ends up being more expensive than just the rent you pay, because you do not earn any interest on the deposit you pay to the landlord, which can go as high as 10 months’ rent in some places.

Watch your money make more money

When you are going to live in a city for long, it makes sense to buy a house. This gives you a sense of belonging and settlement, while helping you identify with the city’s pace and lifestyle. Not to forget, property prices always go up, making property a smart investment decision. So, the more you delay your property purchase, the more money you will have to shell out (considering the amount you would have had paid towards rent and the increase in the price of the property).

In conclusion:

Buying a property will always be a smart and sensible decision. If you travel around a lot, your own home will provide you with the anchor you need and a place to come back to. An Increase in income levels and disposable incomes, and the availability of easy and innovative loan options and tax incentives, buying a house is the prudent way to go.

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Decoded: Pradhan Mantri Awas Yojana

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When the NDA government came into power, one of their promises was to provide housing for all by 2022. A dream that seems unachievable for many is inching closer to reality with the government’s new steps. The Pradhan Mantri Awas Yojana (PMAY) has expanded its scope to address the housing needs of those planning to buy their first home. The Prime Minister has doubled the quantum of loan eligible for interest benefits under the PMAY in cities to Rs. 6 lakh since the initial days after its launch.

What is the PMAY?

Launched in 2015, the PMAY was the first step towards fulfilling the government’s dream of building affordable pucca houses (with round-the-clock electricity, water facilities, and proper sanitation) for people.

This scheme has a number of aspects that need to be understood:

  • This scheme is applicable only for first-home buyers. Additionally, people with property against their name (or those who have help property earlier, but have transferred the property to someone else’s name) will not be eligible.
  • Banks and housing finance companies will not charge a processing fee from applicants
  • Eligibility: Those who have applied for a loan on or after 1st January, 2017, and those whose loans have been sanctioned on or after 1st January, 2017, are eligible for the scheme.
  • The tenure of the loan sanctioned is to be 20 years or that preferred by the beneficiary, whichever is lower.
  • Most banks are bending over backwards to help people make use of this scheme. They have created separate teams to help people buy their first home under this scheme, deployed more people, and created robust infrastructure to support the influx of people interested.
  • The total subsidy on interest accrued on these loans will be paid to the beneficiaries in one go, thereby reducing the burden of EMIs. The beneficiaries, however, will not get the money in hand. It will be adjusted against the principal quantum of the loan.
  • Those earning up to Rs. 18 lakhs a year are eligible for the loan. The eligibility parameters will be applicable only till March 2021, after which only those earning up to Rs. 6 lakhs per annum will be able to avail of this scheme.
  • Under this scheme, women are to be given preference. People can avail of this scheme under their mother’s name, sister’s name, and wife’s name.

How do you go about applying for the subsidy?

  • For starters, you need to look for a flat you want to buy.
  • Once you have zeroed-in on a house, you need to approach a bank or an NBFC (Non-Banking Financial Corporation)
  • During the process of applying for a loan, you’ll have to notify the lenders of your intention to avail of the PMAY scheme.
  • The lending corporation will gather your details and send it to the National Housing Board (NHB) for verification.
  • Upon successful verification, the NHB will sanction the subsidy and transfer the amount to your loan account.

The scheme will enable buyers to buy a bigger home in the same budget. For example, if you can afford a 1 BHK for 10 lakhs, you will be able to buy a 2 BHK for 15 lakhs with the help of this subsidy.

To calculate how this scheme will help you reduce your EMIs, visit http://pmaymis.gov.in/EMI_Calculator.aspx

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What is the real estate bubble?

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A real estate bubble is a sudden and feverish increase in real estate prices of an area, mostly caused by demand and speculation. Real estate bubbles usually form with an increase in demand when the supply is limited, and the limited supply takes a long time to replenish and increase. At such a time, a number of people speculate and their speculations affect the market, which drives the demand further.

For example, announcement of the construction of a new airport in Shamshabad (Hyderabad) led to heavy media speculation. This speculation resulted in people feverishly buying and selling land around the area, and the property prices shooting up. This surge dissuaded developers from investing, and the prices had to be corrected to encourage development.

In many cases, it takes a long time for the price correction to take place, and a bubble can either form while the area is developing or before the development starts.

But, is this development sustainable?
At some point of time, demand decreases or stagnates, prices drop, and the bubble bursts.

What causes a real estate bubble?

  • An sudden and unprecedented upturn in general economic activity and prosperity that puts more disposable income in consumers’ pockets and encourages home ownership
  • The paucity of available land as a result of poor infrastructure drives prices in the most sought-after areas
  • Restrictive town panning rules that stymie development and increase prices
  • Speculative and risky behaviour by home buyers and property investors fuelled by unrealistic and unsustainable home price appreciation estimates

What causes the bubble to burst?

The bubble bursts when excessive risk-taking permeates the real estate system. This happens while the supply of real estate is still increasing. In other words, demand decreases while supply increases, resulting in a fall in prices.

This pervasiveness of risk throughout the system is triggered by losses suffered by homeowners, lenders, and property investors. Those losses could be triggered by a number of things, including:

  • An increase in interest rates that puts homeownership out of reach for some buyers and, in some instances, makes the home a person currently owns unaffordable, leading to default and foreclosure, which eventually adds to supply.
  • Demand is exhausted, bringing supply and demand into equilibrium and slowing the rapid pace of home price appreciation that some homeowners, particularly speculators, count on to make their purchases affordable or profitable. When rapid price appreciation stagnates, those who count on it to afford their homes long term might lose their homes, bringing more supply to the market.

The bottom line is that when real estate prices reach a point where people cannot afford, there are no sales for over a year, developers correct their prices to make real estate affordable, then the bubble bursts.

How to identify a real estate bubble?

A real estate bubble is usually identified in retrospect. But, if we pay close attention, we’ll be able to recognise certain indicators.

  • A sudden and illogical hike in the property prices of a certain area is enough to raise a red flag.
  • Property prices have the propensity of rising. That said, one should always look at the reason behind the said rise. There are areas that have developed and a price rise in these areas is quite justified. However, a price rise based on an announcement or speculation should be considered warily.
  • Every city has certain localities that will always have steep property prices. But, if the prices of properties in a certain area are high because of proposed future plans, then one should avoid investing these areas.
  • One should always look for available/vacant flats in properties to ascertain the existence of a real estate bubble. This means, the developer had raised the prices to an extent where it stopped being feasible for the general populace to invest in his project.

These are indicators of an impending market correction in the near future and you would benefit by waiting for the prices to drop.

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What Makes Hyderabad the Best City to Live in?

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Hyderabad – a city that has more to offer than any other

In India’s metropolitan cities, where property prices are sky-rocketing and creating a real-estate bubble, thereby making it increasingly difficult for people to own a house, Hyderabad still is one of those metropolitan cities where you can enjoy reasonable property rates while growing consistently and sustainably. The city is experiencing a promising growth with people and companies investing in properties for many reasons – including various schemes being launched by the government and a number of start-ups sprouting in the city that attract talent from all over the country.

Sustainable growth

Hyderabad is one of the few cities in the country that has been prepared for growth, with well planned infrastructure. Most metropolitan cities in India did not foresee exponential growth, resulting in the cities’ current infrastructure enduring more than twice its capacity. But, with forethought, Hyderabad has avoided bursting at its seams. With the Outer Ring Road (ORR) embracing the city, Hyderabad has been able to spread its wings and experience structured growth as opposed to the haphazard expansion of other cities. The ORR of Hyderabad now connects more land parcel hence making it possible for suburban developments. Additionally, the upcoming metro rail promises to improve an already solid infrastructure.

Employment in Hyderabad

The city is growing into a hub for start-up companies as land prices are low when compared to neighbouring cities like Chennai and Bangalore. It is more economical to buy land in this city and start a business of your own (or to rent office space). Moreover, a start-up is more likely to be successful in a city that is still growing than in cities that seem to have reached a saturation point (in terms of space and the possibility of growth and expansion). With pocket-friendly rates, the talent will come at a reasonable price as opposed to cities where high cost-of-living makes talent expensive.

Well-developed and maintained pretty well, Hyderabad has a large number of IT companies that have set camp. As a result, the city is witnessing a major influx of employable people from various parts of the country. This has led to a rise in the number of apartments and independent houses being built. The pleasant weather of the city has helped in its growth. Real estate in Hyderabad is where you should invest, for it will only fetch major gains in the future.

Excellent water facilities

Cities like Bangalore never dreamt of growth and expansion. They did not envisage a future where water beds won’t be enough to meet the needs of the millions of people moving in, and did not install underground pipes to route water from surrounding rivers into the city. As a result, the cities’ municipal corporations have to resort to supplying the residents with water from bore wells.

Hyderabad, on the other hand, has a steady supply of clean drinking water from rivers that flow nearby, and does not have to depend solely on digging out water from under the ground. It also supplies continuous running water to the 87 lakh people that call the city home.

Connectivity

Hyderabad was a Nizam’s city with Charminar as the sole focal point. In the past few decades, the city has grown to be one of the most sought-after locations to work and to live, with multiple focal points and ecosystems developing to accommodate the growth.

Excellent connectivity, coupled with brilliant roads and competent public transport, has attracted people to the City of Pearls to earn their living and raise a family. Hyderabad is surrounded by major national highways that make it easy to travel to other cities.

Cost of Living

Compared to other cities in India, the cost of living in Hyderabad is still economical. The growth of the city as one of India’s premiere IT hubs has not blown the cost of property and other amenities out of proportion, making it one of the best cities to live and work in.

Lifestyle and Entertainment

Hyderabad is home to the young and aspirational crowd of India. This has given birth to a number of places where one can go for entertainment and relaxation. The pubs and lounges in the city host some of the best parties in the country, while microbreweries cater to those who love their beer.

The city has a rich culture of fine arts that finds patronage in the large number of art enthusiasts that throng the galleries. Hyderabad’s local cuisine has admirers worldwide, and the people’s taste for the new has prompted the rise of eateries catering to various cuisines in the city.

In the last few years, Hyderabad has experienced unprecedented growth, with the city being heralded as one of the major IT hubs in the country. A land of promises, Hyderabad is the city to live in.

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