ARE YOU THINKING OF BUYING A HOUSE IN PUNE

ARE YOU THINKING OF BUYING A HOUSE IN PUNE

TRY BEFORE YOU BUY

MUSINGS OF A NOVICE SELF-STYLED PROPERTY GURU Part 4

By

VIKRAM KARVE

In continuation from Parts 1,2 and 3 (links given below) - please read these parts but remember to come back here (or if you want why not read Part 4 first, comment, and then go back to the earlier parts)

Part 1: http://karvediat.blogspot.in/2012/03/why-are-property-rates-so-high-in-wakad.html

Part 2: http://karvediat.blogspot.in/2012/04/real-estate-prices-in-pune-hype-and.html

Part 3: http://karvediat.blogspot.in/2012/04/house-hunting-in-pune-5-tips-for-buying.html

Part 4

In the present scenario, what is the best way to buy a residential property in Pune?

This is what we were discussing one evening.

As you know, unlike other investment avenues, where proper systems and regulators are in place, the real estate sector is a free-for-all since till today it remains unregulated and the real estate “industry” does not have the formal status of an industry. We have heard that the government is trying to introduce a proper real estate bill incorporating rules and regulations to introduce transparency in the real estate industry with a statutory regulator, but one never knows how long it will take before this real estate bill is implemented. Till this happens the hapless consumer (the buyer) is at the mercy of the sellers, and so, if you are a buyer you have to be very careful, especially in the present unpredictable economic scenario and volatile political environment.

If you want to buy a house in Pune, here are some options for you. The best option is to “try before you buy” meaning take a house on rent in the locality where you want to buy a house. This will give you a first hand feel of living in that neighbourhood and also give you enough time to do proper market survey and select a house of your choice. Suppose you don’t like the locality, you always have the option of moving to another place.

The next best option is to buy a relatively new resale house. The “teething troubles” (liveability, suitability, as also the legal and technical aspects) will be over by then since the house would have been “lived in” and all technical systems, quality aspects and standard modalities would be established and proven, which is a big advantage.

The third best option is to buy a completed ready-to-move-in (ready possession) house. In case you have taken a home loan you can start reaping tax benefits immediately. Also, in case you are an investor and want to rent out the house you will start getting return on your investment (rental money) immediately.

Well, I write this for the play-safe risk-averse persons who are buying a home as end users for living in by investing their hard earned money. In the current uncertain economic scenario we have observed that there are execution delays in many real estate projects, and since this sector is unregulated, the consumers are quite helpless and there is nothing they can do about it.

We met a person who was supposed to get possession of his home two years ago and this has been inordinately delayed. He had planned that he would be able to move into his own home immediately after his retirement and he would have been able to do so had his house been delivered on schedule. Now, for him, everything has gone for a six. The poor chap is living in a rented house paying a heavy rent. He is also paying a hefty EMI towards his home loan. He cannot claim tax deductions since the house is not ready. He is also losing notional rent (in case he wanted to give the house on rent which he could have used for paying off his EMI and also to get tax benefits). The other day, someone said that there is a cash crunch in the market due to the unpredictable economic climate in the days ahead and this may cause further execution delays and the moment he heard this he was  further demoralized. The poor guy is not sure when he will get possession of his house and this uncertainty is causing him anxiety and stress and taking a toll on his health.

If your peace of mind is affected, this cost cannot be quantified in money.

The lesson we have learnt is that, considering the uncertain situation which may cause execution delays, for simple people like us who are investing their life savings to buy a home, it is best to steer clear of pre-launch offers. Even for under-construction projects it is advisable to have a proper look and satisfy yourself that your house will be delivered to you on schedule.

There is a counter-view that if you have an appetite for risk-taking, then you can make a fortune by investing (speculating) in pre-launch offers. This may be a good idea only if you are confident that the appreciation you will get from your property (taking into account the estimated execution delays and inventory overhang) will far exceed the returns you will get if you put the same amount of money in an Fixed Deposit (@ 10%) or some other safe investment. In the present unpredictable economic scenario and uncertain political environment (with elections round the corner in 2014), do you feel that property rates will appreciate so much in the near future in places like Pune (where the property prices already seem to be too high) that it is wise take a risk and go in for pre-launch offers or is it better to play safe and buy a ready possession house?

As I said, we are novices in this field; so if you are an expert, do tell us what you think.

To be continued in MUSINGS OF A NOVICE SELF-STYLED PROPERTY GURU Part 5 ...

VIKRAM KARVE 

Copyright © Vikram Karve 2012
Vikram Karve has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this work.
© vikram karve., all rights reserved.

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About Vikram Karve

A creative person with a zest for life, Vikram Karve is a retired Naval Officer turned full time writer. Educated at IIT Delhi, ITBHU Varanasi, The Lawrence School Lovedale and Bishops School Pune, Vikram has published two books: COCKTAIL a collection of fiction short stories about relationships (2011) and APPETITE FOR A STROLL a book of Foodie Adventures (2008) and is currently working on his novel and a book of vignettes and short fiction. An avid blogger, he has written a number of fiction short stories, creative non-fiction articles on a variety of topics including food, travel, philosophy, academics, technology, management, health, pet parenting, teaching stories and self help in magazines and published a large number of professional research papers in journals and edited in-house journals for many years, before the advent of blogging. Vikram has taught at a University as a Professor for almost 15 years and now teaches as a visiting faculty and devotes most of his time to creative writing. Vikram lives in Pune India with his family and muse - his pet dog Sherry with whom he takes long walks thinking creative thoughts.

Vikram Karve Academic and Creative Writing Journal: http://karvediat.blogspot.com
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