What is the right age to buy a home? | Housing News

https://housing.com/news/right-age-buy-home/?utm_source=housing-existing&utm_medium=email&utm_campaign=news-digest-22april2017

What is the right age to buy a home?

Considering that the age of an individual plays an important role in obtaining a home loan, we look at whether there is any ideal age, at which one should consider buying a property – for investment as well as self-use

By Kishor Pate•April 18, 2017

In India, the current belief is that property investment is ideal, only for those with upcoming or established careers. However, is this true? How do banks, lenders and the property sector at large, view investors who do not fall in that age bracket anymore? Can one be too old to put money into property and would one have missed the chance to grow their wealth through real estate at some point?

Of course, it is true that banks are willing to lend to a person only for so long. When a prospective borrower is nearing retirement, the concept of giving them a long-term home loan does not make much sense to them. Let us examine this a little more closely.

Eligibility for home loans, on the basis of age

When a person is in his or her 30s, they have around 30 years of active professional life ahead of them. Naturally, this gives them abundant time to develop a large property portfolio. However, even when they are in their 40s, they are far from being too old to successfully invest in property. They still have 20 years ahead as income-generating citizens and even more, if one is successfully self-employed or runs a business.

Of course, it goes without saying that the sooner one invests, the higher will be the ultimate gains because profits from property compound over time. Generally, it is assumed that one must have the ability to service home loans for 25-30 years, to finance one's property portfolio.

See also: Should you invest in a retirement home?

Investment strategy for individuals nearing retirement

However, many banks in India have now understood that people can and do work past the conventional 'retirement age' of 65 these days. Moreover, once one has secured a good portfolio of assets, one has additional clout and credibility with banks, since these properties can act as collateral for fresh loans even at the age of 50 or above. Definitely, the time to experiment with 'speculative' investment should be over by this time, as one should justifiably have a healthy aversion to risk by age 55.

By this age, the ideal strategy should be to boost the value of one's existing assets, via proven value-boosting routes, such as renovations. A person who wants to keep investing in property in India, at age 60 or above, needs to have a very clear understanding of the market, as well as a great deal of confidence in one's personal finances.

While it is now technically possible – under certain circumstances – to raise a home loan for property investment even after retirement, the question of whether one would want to is, of course, a personal one and would depend on a variety of circumstances – most related to one's financial soundness and appetite for such activities.

Ideal age for buying a home for self-use

What about those looking at buying a home for personal use? This is where it gets a lot simpler because there is no 'ideal' age for home ownership.

If one has been living in rented homes all along, buying a home even at 65 makes perfect sense. In the first place, it is the perfect retirement gambit, as it provides freedom from the recurring expense of monthly rent. Secondly, it secures a sound asset which gives unmatched financial security and can be used to raise funds in emergencies. Thirdly, a property is the perfect bequest to leave behind for one's children.

The bottom line is that there is definitely such a thing as an 'ideal age bracket' for property investment, although this age bracket is flexible, depending on various factors. However, there is no 'ideal age' to buy a home for personal use. The latter is especially true, if one sees a self-owned home more as an abode and sanctuary of financial freedom and security, than as an investment instrument.

(The writer is CMD, Amit Enterprises Housing Ltd)

Arun Gupta

Why 2017 is the best year to buy affordable houses, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/residential/why-2017-is-the-best-year-to-buy-affordable-houses/58048099

Why 2017 is the best year to buy affordable houses

By: E Jayashree Kurup \ Magicbricks

Over 1.66 crore applications for various credit linked subsidies for housing loans have been received through various channels by the government in the past few months. In a country where online internet penetration is a mere 37% overall and 62% urban, this data available with the Ministry of Housing and Urban Poverty Alleviation shows that digital access is not an issue. It may require some facilitation. However, that too, provides job opportunities and therefore, is a good economic activity to pursue.

The Credit Linked Subsidy Scheme (CLSS) was the Housing Ministry's effort to dovetail finance availability into the Prime Minister's vision of a liveable house for every Indian family by 2022. The interesting thing is that while earlier it was housing shortages that were being computed, today the extent of subsidy sanctions are being touted.

So how does every citizen avail the sanctions? The CLSS announced in a previous budget offered a 6.5% interest subsidy to be credited into the borrower's account for the first Rs 6 lakh of loan availed for buying a house of 30 and 60 sq m carpet area, under the Pradhan Mantri Awas Yojana (PMAY). The family income of the buyer was to be within Rs 6 lakh. This amounts to a net subsidy of 21% for the applicant. For the first time the government efforts had been stretched to include the Lower Income Group (LIG) segment and not the social sector of the Economically Weaker Sections (EWS) alone.

The Prime Minister's announcement on December 31, 2016, that two new credit subsidy schemes for the middle classes, MIG 1 & 2, was also announced ensured that the net was widened further. Now those with upto Rs 12 lakh annual income could avail of the housing subsidy of 4% and those with annual income levels of Rs 18 lakh could avail of subsidy levels of upto 3%.

This meant that if a young urbanite with a family income of Rs 18 lakh approached a bank for a loan, he or she would be eligible to seek loan for a house of upto about Rs 65 lakh. This accounts for over 55% of the stock that is actively traded and listed on property portals like Magicbricks.com. On this loan the borrower is eligible for a subsidy of 3% on the first Rs 18 lakh, if the loan has been availed after January 1, 2017. This effectively brings the rate of interest down from the existing 8.5%. "This makes it the best time to buy an affordable house in urban India," said Amrit Abhijat, Mission Director, PMAY and JS (HFA).

While nay-sayers have been predicting the digital challenge, statistics show that over 30 lakh people, without any aid, have been able to come and apply on the HUPA website. When some states were found not to be pushing for more CLSS applications, the Common Service Centres, manned by IT literates was launched. They charge a facilitation fee of Rs 25 per application but 28 lakh people have applied, paying this charge. The National Housing Bank (NHB) is now determining the eligibility of these applicants and estimates that at least 80-90 lakh loans will be disbursed.

For the first time, the Middle Income Group (MIG) housing has got incorporated into affordable categories. However, stressed Dr P Jaipal, Sr Executive Director, HUDCO, "The MIG subsidies are for one year. If we struggle on interpreting the law for a long time, then time will run away. The industry needs to be facilitated to transfer to MIG and take advantage of the scheme, or the next year when the scheme is appraised, the verdict will be that it is not a success."

Another concern raised by Dr Jaipal was that since it is easier for the developers to make money out of the MIG sector, the higher end of the LIG segment that was being addressed by developers may be neglected. One way of ensuring developer interest is to keep a percentage of priority lending funds from banks for constructing LIG housing.

This plea was echoed by the State Bank of India representatives who asked for the definition of affordability to be dovetailed into the priority sector lending.
With or without priority sector lending, banks such as SBI and HDFC are holding major sessions on CLSS for its staff. This is part of the preparation for a large number of disbursals. NHB, on its part, is now equipped to make the disbursals into the bank accounts of the borrower in two days, thanks to a massive digitising exercise that has won them an award as well.

With the Digidhan and other digital cash movements in the past, many informal sector workers now have a digital footprint that gives them a CIBIL score. This is already being used by microfinance lenders such as the SEWA bank to lend between Rs 1-3 lakh. The ministry is already in talks with the Indian Banks Association (IBA) to sort out the concerns of lending to the unorganised sector. A simplified application form and document process has been circulated by the IBA. However, appealed the ministry, finally the banks have to take a compassionate view when lending to those in the informal sector as they may not have too many documents to support their application.

If you are buying a house in resale markets from someone who has got a house using subsidy and is selling now that the lock-in period is over, you are eligible to be considered for funding under the subsidy scheme. But seller does not get more subsidy.

The PMAY was launched in 4011 statutory towns as per Census 2011. Now all states are adding more statuatory towns, which now numbers 4300, to avail PMAY advantages. NHB, has now mapped all the localities in these cities to postal codes that will facilitate lending by the banks.

As the Secretary Dr Nandita Chatterjee stressed, "The entire purpose of PMAY is that those with no shelter should get a house and not to trigger speculation. So the schemes are all to facilitate purchase of the first house."

With the inclusion of LIG and MIG in the fold of affordable housing, the government is clearly matching aspirations to resources to create a kind of ecosystem fuelled by incentives. They are available in 2017-18. The home loan interest rates too are low. Coupled with subsidies, they are the lowest in 20 years. But unlike in the Housing and Habitat policies of 1998 and 2007, when there was a lot of consumer facilitation and access to funds, this time round, the extent of the incentives is for a far shorter period.

Come 2018, all the incentives may not exist. Therefore, it is a good time to buy now if you don't own a house.

Arun Gupta

House Price Index: Home prices across India on the rise: RBI, Real Estate News, ET RealEstate

http://realty.economictimes.indiatimes.com/news/regulatory/home-prices-across-india-on-the-rise-rbi/58000680

Home prices across India on the rise: RBI

MUMBAI: Real estate prices continued to grow steadily according to the latest installment of Reserve Bank of India's House Price Index (HPI).

While the overall index sequentially rose 2.2% at the end of December 2016, almost seven of the ten cities tracked by RBI saw increase in price last year.

The House Price Index, that measures price levels across the nation, rose to 240.2 in December, from 234.9 in the September quarter.The annual growth in all-India HPI increased by 60 basis points to 8.3% however it remained lower than 9.7% annual growth recorded a year ago.

RBI's index also noted a wide divergence in city-wise housing price movements. Annual growth in the price index ranged from an increase of 19.3% in Lucknow to a price correction of 5.4% in Jaipur during the period under review.

"All the metro cities witnessed housing price-rise on Y-o-Y basis, though Chennai witnessed some moderation during the latest two quarters," the RBI said.

"The city-wise HPIs also witnessed large variance in sequential terms Kanpur recorded highest rise at 12.1% whereas Kochi witnessed significant contraction at (-) 4.7%.

Arun Gupta

http://epaperbeta.timesofindia.com/Article.aspx?eid=31814&articlexml=RR-rate-hike-to-hit-buyers-hard-03042017004039

The Times Group

Developers Unlikely To Share Costs

The rise in the Ready Reckoner (RR) rates in all prime locations of the city and its outskirts is set to hit the consumers hard.

A day after the state government increased the RR rates by an average 3.64 % in the city, developers on Sunday said they would have no scope to absorb any further increase in costs.

The developers added that they would be forced to pass on the increased development and premium charges, as well as the compliance costs that will come into effects following implementation of Real Estate Regulatory Authority (Rera) rules, on to the buyers.

Shantilal Kataria, president of the Confederation of Real Estate Developers' Associations of India's (Credai) Maharashtra chapter, said the overall increase of the RR rates will affect the buying power.

"The current increase also means a rise in premiums, development charges and labour cess. It is unlikely that the builders will share these costs," he said.

Credai Pune president Shrikant Paranjape said there's a direct link between the RR land rates and the premiums, development charges payable for sanctioning building plans and the stamp duty on land purchase. The developers would be affected, as the addi tional initial cost will reduce the number of projects that can be launched. "This can affect the government's housingfor-all goal," he said.

IT consultant Sneha Makhija, who was planning to invest in a flat in an upmarket area, said she will wait till next year. "The government has termed the increase as `slight'.But the rates in the city's core areas have seen a 10-12% rise.The developers are bound to increase property prices,"' she said.

Developer Sachin Kulkarni, who is into affordable housing projects, said: "Seven major states have waived stamp duty on affordable housing projects. Maharashtra had committed to doing the same.But now land and building ra tes have been hiked by more than 12% on the outskirts of Pune city. It was in these areas that the affordable houses are coming up in a big way ," he said.

Rohit Gera, vice-president of Credai (Pune), said: "Implementation of Rera is around the corner and this, too, will substantially increase the developers' cost structure."

Arun Gupta

municipal growth in economic recession | eSakal

http://beta1.esakal.com/pune/municipal-growth-economic-recession-38077

आर्थिक मंदीतही पालिकेची चांदी

घरखरेदीसाठी ग्राहकांची पुण्यापेक्षा पिंपरी-चिंचवडला पसंती; गृहप्रकल्प जोमात
पिंपरी - बांधकाम क्षेत्रात सर्वत्र मंदीचे सावट असताना पिंपरी-चिंचवड शहरात मात्र बांधकामे जोमात सुरू आहेत. चांगल्या पायाभूत सुविधा आणि पुण्याच्या तुलनेत कमी किमती यामुळे नागरिक घर घेण्यासाठी पुण्यापेक्षा पिंपरी-चिंचवडला अधिक पसंती देत आहेत. महापालिकेच्या बांधकाम परवानगी विभागाच्या ३१ मार्चच्या आकडेवारीवरून ही बाब अधिक स्पष्ट होते. 

आर्थिक मंदी, केंद्र व राज्य सरकारांचे बदललेले बांधकामविषयक धोरण यामुळे बांधकाम क्षेत्र आर्थिक संकटात आहे; तसेच नोव्हेंबर २०१६ मध्ये पंतप्रधान नरेंद्र मोदी यांच्या नोटाबंदीचाही मोठा फटका बांधकाम क्षेत्राला बसला आहे. या परिस्थितीत राज्यात सर्वत्र बांधकाम व्यवसाय तग धरून राहण्याचा प्रयत्न करीत असताना पिंपरी-चिंचवड महापालिका हद्द व परिसरात मात्र बांधकामांची चांगलीच बूम सुरू आहे. नामांकित बांधकाम व्यावसायिकांनी परिसरात बहुमजली गृहप्रकल्पांची काम हाती घेतली असून, अनेक प्रकल्प पूर्णत्वाच्या मार्गावर आहेत.   

पुण्यापेक्षा जादा मिळाला महसूल
पिंपरी-चिंचवड महापालिकेच्या बांधकाम परवानगी विभागाने मिळविलेला महसूल पुणे महापालिकेपेक्षा सरासरीने जास्त आहे. पुण्याचे उद्दिष्ट १०५० कोटी रुपयांचे होते. त्यापैकी फक्त ५३२ कोटी रुपयांचे उत्पन्न पुण्याच्या बांधकाम परवानगी विभागाने मिळविले. हे उत्पन्न जेमतेम ५० टक्के इतके आहे. या तुलनेत पिंपरी-चिंचवडने ९७.६२ टक्के उद्दिष्ट साध्य केले आहे. यावरून पिंपरी-चिंचवडमध्ये बांधकामाचा वेग वाढल्याचे स्पष्ट होते.   

दृष्टिक्षेपात बांधकामे अन्‌ महसूल

गृहप्रकल्प जोमात : वाकड, पुनावळे, रावेत, किवळे, मामुर्डी, मोशी, चिखली, चऱ्होली 
वर्षभरात महापालिकेच्या बांधकाम विभागाकडून परवानगी : सुमारे साडेअकराशे प्रकल्प
बांधकाम परवानगी विभागाचे २०१६-१७ चे महसूल उद्दिष्ट : ३६० कोटी
मार्च २०१७ अखेर महसूल जमा : ३५१ कोटी ४४ लाख ५६ हजार ७५३ रुपये
नगररचना विभागाचे विकास हस्तांतर (टीडीआर), छाननी शुल्क व नागरी वाहतूक निधीतून उत्पन्न : १३० कोटी ४४ लाख ७४ हजार १४५ रुपये
महसूल वसुलीची उद्दिष्टपूर्ती : ९७.६२ टक्के  

पुण्यातील घरांच्या किमतीपेक्षा पिंपरी-चिंचवडमध्ये निम्म्याने कमी दराने घरे उपलब्ध आहेत. पुण्यात घर खरेदी करणारा वर्ग उच्चभ्रू आहे; तर इकडे मध्यम व सामान्य लोकांचा ओढा दिसतो. पायाभूत सुविधाही पुण्यापेक्षा इकडे चांगल्या असल्याने इकडे घरांना मागणी आहे.
- अय्यूबखान पठाण, सहशहर अभियंता, महापालिका

Arun Gupta

Is GST bad news for home buyers and renters? | Housing News

https://housing.com/news/gst-bad-news-home-buyers-renters/?utm_source=housing-existing&utm_medium=email&utm_campaign=news-digest-1april2017

Is GST bad news for home buyers and renters?

Monthly instalments on home loans taken for under-construction houses, will attract GST from July 2017. So will land leasing and rented properties, including the currently-exempt residential housing. How will this impact home buyers and the rental market? We examine

By Ramesh Nair•March 31, 2017

The Lok Sabha, on March 29, 2017, cleared four bills in preparation of the upcoming rollout of the Goods and Services Tax (GST) regime:

• Integrated GST
• Central GST
• Union territory GST
• Compensation bill

This sets the stage for states to enact laws and implement the new tax regime from July, 2017.

The tax rates applicable on products and services, are expected to be announced by the government by April-end.

As widely reported, the Central GST (CGST) bill states that any tenancy, lease, license to occupy land, or easement, will be considered as supply of service. Any lease or letting out of a residential, industrial or commercial building for commercial purposes – wholly or partly – will also constitute a supply of services.

Simultaneously, the sale of land or building (except the sale of under-construction buildings) will not be treated as either supply of goods or services. The sale of land and buildings will be out of the purview of GST and such transactions will continue to attract stamp duty.

Therefore, once GST comes into effect from July, the leasing of land and buildings, as well as home loan EMIs paid by those who purchase under-construction apartments, will attract the applicable tax rate.

Depending upon the tax rate that gets announced for real estate, the effect could be higher or lower than today.

See also: GST Bill passed in Lok Sabha: How will it impact the real estate sector?

Tax rate applicable to real estate

The industry is hoping that a lower tax rate of 12%, will be applied on real estate in the under-construction stage, as it will help to reduce the cost of homes and increase affordability for end-users.

However, a higher rate of 18% would increase the cost of houses in under-construction projects.

The government must provide clarity on the composition scheme (i.e., abatements for cost of land) and on the service tax and value added tax (VAT) that are already paid by developers for their under-construction projects.

Under the service tax regime, developers and home buyers can obtain benefits under the abatement scheme. In the case of buying an under-construction flat, an abatement of 75% is allowed, subject to the flat being less than 2,000 sq ft and sold for less than Rs 1 crore, taking the effective tax rate from 15% to 3.75%. If the two conditions are not met, the abatement is reduced to 70% and the effective tax rate to be borne by the buyer increases to 4.5%. States also charge VAT on top of this service tax.

However, if the abatement rules do not apply under the GST regime, the applicable tax rate would shoot up dramatically. Similarly, the final applicable tax rate would define whether those living in rented residential properties end up with much higher or slightly higher rental outgo, as the additional tax to be paid by the landlord will get passed onto the lessee.

Under the current regime, service tax is levied on rents paid for commercial and industrial units and not for residential units.

Impact on affordable housing

According to reports, the Ministry of Housing and Urban Poverty Alleviation (MHUPA) has suggested to the finance ministry that the current exemption of service tax on affordable housing, should continue even under the GST regime.

A decision on this is expected before July.

Given the government's goal of 'Housing for All by 2022', this exemption is likely to continue under the new tax regime. The MHUPA has also requested the states and union territories to consider waiver or rationalisation of stamp duty on affordable housing projects.

(The writer is CEO and country head, JLL India)

Arun Gupta