Properties, Homes & more

In this new series, I would focus on the latest trends in real estate, properties, home improvement sphere. I will try to fetch trends from across major markets across the world, but my focus will be on India, and specifically on Mumbai because that is MY city.

OK. When I think about trends in real estate/ properties, the first thing that comes to my mind is that of the BROKERS - the real estate brokers. These are those kind of species who make money for doing little, or practically negligible. I have always wondered how they make so much money! They charge at least 1% of the total cost of the apartment/ home/ flat/ shop/ any property they help in selling (or even giving on rent). I agree that they have references and leads and can roam around for days together (along with prospective clients of course). But I simply fail to understand what additional work they do…

Most of these species are rude and arrogant. They believe that they are THE kingpins of the real estate, without which no one can buy/ sell any property. They treat rich people differently and they simply do not pay much heed to middle-class people (buyer/ seller). There have been reports that many of these brokers have underworld connections and are involved in extortion. They will simply roam around the city showing prospective clients one flat or the other. They will hide important details - like previous owners, if any, of the property; how the rights of ownership have been transferred, etc. They do little work and most of the trouble is taken by the prospective clients. They why should we pay these brokers? My main point here is: Why do we need these brokers?

So the newest trend which I am seeing nowadays is Broker-free deals. There are many customers who do not want to approach a broker, just because the service provided and the price charged are not matched (price is often exorbitant as compared to the service provided). And the best part is, even the builders (or sellers) are encouraging this move. They often provide more discounts for direct sales.

Mark my words - there will be a broker-free real estate dealing culture - may be within a couple of years from now.

This is final part of the series of articles on how one can utilize the inexpensive Styrofoam Ceiling Tiles as an innovative home decor. In Part 1, I explained what Styrofoam tiles are, their properties, and what make them so eligible for creative home decor. In Part 2, I gave a brief step-by-step approach on installing Styrofoam tiles.

In this article, let’s see how one can transform a plain looking ceiling into a fantastically beautiful one with the user of Styrofoam tiles! Here are some of the examples:

Please click on respective images to view larger image.

If you would notice, with the help of Styrofoam Ceiling Tiles, you can transform the dull, plain, (mostly) white ceiling into something totally hep… something which completely reflects the personality of the owner… something which not only makes the dull ceiling beautiful but also make it look trendy and stylish… something which is truly yourself… something which will attract zillions of jealous looks towards your “inexpensive yet classy” home decor!

Ramakant lives in a 3 BHK flat in a posh Thane apartment. He had purchased the property around 1.5 years ago for Rs 60 lakhs. Today, the cost of the apartment is almost 1.5 times original price. With an (2 times) increase in his pay package, Ramakant is sure he can save some additional money every month. He is contemplating on buying a second house. Is this a wise decision?

Discussion…

Correction phase

In today’s times, the realty sector can be best described as in a correction phase. Ideally, this is the best time to invest in property.

Easy home loans

A few years ago, procuring a home loan was quite difficult with lot of administrative hassles, government hurdles (or red-tape), and high interest rates. People could buy their own homes only towards the end of their careers when they had saved enough (PF) money. Things have changed considerably over these years. If you are a salaried individual of today - employed with a large, reputed firm - and have no history of previous loan defaults, getting a home loan is absolutely simple for you.

Nowadays, the lender decides on your housing loan eligibility after considering factors like age, income, educational qualification, repayment track record and credit history. Interest rates have dropped down to single digits. You can, in fact, shop around for the bank that offers you the best deal!

Tax benefits

If you have acquired a second home, the principal paid on both the home loans, will be eligible for deduction under Section 80C, subject to the overall cap of Rs 1 lakh. The entire interest repaid can be deducted from your taxable income for the second house. Only one of your properties can be shown as self-occupied. In case of the second property, actual or notional rental income has to reflect as additional income earned. You can deduct 30 percent from this rental income towards maintenance charges. Municipal taxes can also be deducted from rental income.

Rental income

The rental income that a second property can fetch is a major factor that many buyers take into consideration. This rental income can help pay off a large portion of the EMIs. If the property is closer to the heart of the city, the rental income could be higher.

Conclusion

Considering all above parameters, it seems to be a wise decision for Ramakant to buy a second house, provided he can assure himself a decent cash flow after purchasing the second home.

The Government of India (GOI) may modify the draft direct tax code to retain tax shelters on interest and principal repayments for home loans to make the proposed new code more attractive for the average Indian, a finance ministry official told The Economic Times. The proposed direct taxes code, which has been unveiled for public debate and is due to become operational from April 2010, does not provide tax incentives to loan-funded house purchases that are for personal use.

At present, taxpayers are allowed to deduct from their income the interest paid on home loans to a maximum of Rs 1.5 lakh every year. In addition, the repayment of the principal amount is also allowed to be included within the rebate available under section 80C, which has a maximum limit of Rs 1 lakh.

The draft code, billed as a comprehensive reform of the direct taxes regime, has suggested increasing the exemption limit under section 80C to Rs 3 lakh, but the list of eligible expenditure/savings does not include the principal payment. The code also restricts the interest deduction only to in respect houses rented out and where such income is included in the income of the assessee. At present, if a home buyer in the highest 30% tax slab were to avail the maximum tax exemption available on home loans then government loses over Rs 77,000 in tax.

The planned move to discontinue tax benefits for housing has faced widespread criticism and the finance ministry official said that they are looking at provisions (in the direct taxes code) that concern common man directly, including tax incentives to housing.

A few days back, a leading newspaper carried an advertisement on their front page from a builder claiming that they are going to shed a light on the truth and are digging out the fact how the projects from another leading builder are charging Rs 5800/sqft for Plinth Area using hidden costs like Common Areas etc while they charge only Rs 2370/Sq ft for Plinth Area exclusively.

Now, the focus of a property seeker shifts towards the fact that how must he save himself from these smart games from the builder where he tries to buck extra? The smooth talking salesmen on the site of the builder chooses to skip on this fact too. So what should we do? The only way to save your skin from this hook is to have the right knowledge on the Carpet Area , Super Area and Plinth Area.

Here is a quick run-through the exact definitions you should know before diving in to scoop the best deal on property.

• “Carpet Area” refers to the total usable area within the four walls of an apartment or a commercial space, as the case may be. In other words, it refers to the area for which a carpet can be laid if required by the owners.
• “Plinth Area” refers to the entire carpet area along with the thickness of the external walls of the apartment. It obviously includes the thickness of the internal walls and the columns, if any, lying within the four walls of an apartment. The commercial space is not taken into account in calculating the plinth area.
• “Super Built-up Area” refers to the plinth area of an apartment or a commercial unit as added by the balconies and other common areas like corridors, staircase, lift room, motor room, security room, meeting hall, gymnasium and an area reserved for indoor games.

The builders, while advertising or quoting the rates for there properties, tag the carpet area and print the rates of the same in there commercials and public issues. But what they usually sell you is the Plinth Area. There has been a huge lot of roaring on this matter in past and yet the strength of the definition of Builder Area’s is enigmatic.

How many of us really get into the carpet area? We seem to simply go by what the builders say in terms of the saleable/chargeable area.

DO NOT GET FOOLED BY THE BUILDERS. I am intentionally posting this on April Fool’s Day, so as to warn all the readers and prospective proerty-buyers from being called “April Fooled by the builder”!!! Pass on this warning to all those you care about.