Advice to First Time Home Buyers
A home buyer needs to be careful about the property he is planning to buy and look at the developer's track record
The real estate sector in the last few months has gone through a massive transformation. The sector has witnessed a plethora of reforms, including GST, RERA (Real Estate Regulatory Authority), demonetisation, etc. As many as 90 cities have made it to the Smart City list; affordable housing has been granted infrastructure status. Also with rapid economic growth, easy availability of finance along with high disposable income has made it comfortable for young Indians to look positively at buying a home of their own.
Stability in property prices, softening of interest rates and a humongous focus of the current government on housing has renewed interest of young Indians in the Indian real estate sector at a time when the local demand is relatively sluggish. Today, buying a home cannot get any better than before especially for first timers because of the following reasons:
- Government's focus on housing: The Credit Linked Subsidy Scheme (CLSS) launched under Pradhan Mantri Awas Yojana (PMAY) allows first time home buyers to avail more benefits to own a house. This can be utilised for purchase of house and it caters to the economically weaker section (EWS), Low Income Group (LIG), Middle Income Group (MIG) segments.
- Interest benefits on home loans: Apart from the current tax benefits in terms of deductions of up to Rs 2 lakh in interest and Rs 1.5 lakh in principal, a first-time home buyer can claim an additional deduction of Rs 50,000 in interest provided the value of house is less than Rs 50 lakh with a home loan of less than Rs 35 lakh and loan is sanctioned in FY2017. Hence a first-time home buyer now gets an enhanced annual deduction of Rs 2.5 lakh on interest paid, reducing the effective interest rate on home loan even further.
Owning a home requires meticulous planning and involves substantial financial considerations. A home buyer needs to be careful about the property he is planning to buy, whether the property he is buying is right, the developer is right, whether the developer has all the necessary permissions, the track record of the builder, etc.
In this backdrop, choosing a good housing finance company to handhold the customer right through his home buying process has gained far greater importance. Since a home loan is a long-term commitment of 15-20 years, several factors like expertise, quality of service, in-depth domain knowledge and the company's level of commitment and transparency are critical.
To promote affordable housing under PMAY, we, at HDFC have created dedicated teams across the country to educate developers, including their sales staff and consumers about the government's initiatives on the CLSS. HDFC has also conducted special training sessions for its staff. In the last couple of months these teams have made presentations to various corporates, including setting help desk at their offices.
The aim of conducting such workshop is to take PMAY to the real beneficiaries. We have so far conducted over 600 sessions and have witnessed huge excitement amongst people and developers across the country. Our efforts earned us a special CLSS citation from the Government of India.
Renu Sud Karnad
MD, HDFC Ltd