ROOM FOR MORE
The demand for housing persists despite spiraling rents. Caught in a situation where the demand for housing persists but affordability is a rider, the realty sector is trying hard to bounce back. The tri city is facing skyrocketing rentals. Still, the databank with the builders about prospective buyers in the form of highly paid staff of MNC’s and IT firms shows that steep rents do not stop them from taking up knew housing projects in the periphery. Government methods to curb inflation may not have yielded much results, but these have certainly affected the realty sector. Steps like squeezing liquidity and hiking interest rates, especially on home loans, to curb inflation have taken housing beyond the reach of many prospective buyers. While the mounting EMI’s have disturbed the budgets of existing loanees, prospective buyers have had to shelve their plans of a dream home for the time being. The builders, on their part, have had to bear the brunt of an unprecedented rise in construction costs.
Thus, the situation, for the time being may be termed as stagnant, if not recessionary. Under such conditions it will make sense for the builders to hold on for a while, while prospective buyers will be well advised to strike deals in their favor. It’s advantage buyers, with some builders offering attractive proposals like 20 percent down payment and interest free deferment of the full and final payment till the time of possession, which may prolong to two years or more. Such proposals are receiving good response.
Another idea that could gain currency in this scenario is that of zero rentals. Under this option, the allottee has to pay a fixed one time deposit to the builder before taking possession of the accommodation for a fixed license period. At the end of the agree period, the builder refunds the said amount, after deducting payments for repairs etc., if any, against the vacant possession of the premises. For example if a house costing 40 lac is handed over to a licensee for the deposit amount of Rs. 10 lac for three years, the builder, at the end of the deal, shall gain from the appreciation in the value of the building as well as have the benefit of utilizing the funds. The licensee, on his part, saves himself from paying hefty rentals and also gains time to arrange additional amount to own a suitable accommodation.
Thus, the construction sector, in the interest of the consumers as well as further development, deserves incentives. A policy of lower interest rates on home loans in the Rs.20-30lakh bracket and support to the builders offering low budget houses in the shape of tax concessions and rebates can be of great help in easing the housing problem.