Five things to consider before you decide – Tenant or home-buyer?

By Debarshi Nayak

Home ownership is still a far-fetched idea for many millennials typing away at their keyboards while dreaming about having their own little cave. Long-term commitment to home loans is a scary proposition to anyone who might move out of the city with one job change, and the commitment issues only keep getting worse with age.

Factors like unaffordability and skyrocketing prices of real estate properties haven’t been helping the case either, and paying monthly rent with a month or two of security deposit is considered to be a more convenient option in all the metro cities in India. But with a little planning and foresight, buying a house might be one of the best investments you will make in your lifetime.

Wondering how?

Despite all the towering odds, India’s real estate industry is giving the commitment-phobic buyers a lot of believable reasons to switch teams and become property buyers.

High Yield on Rent

Due to a lack of proper rules and regulations, the average rental yield is quite unstable. For the uninitiated, rental yield is the ratio of the annual rent to the property to the total cost of the property. The average rental yield for India is around 2%, which doesn’t make it a smart investment option.

However, things are changing fast in cities like Hyderabad, Ahmedabad, Chennai, Gurgaon, Bangalore and other metro cities. With a much higher yield on rent, industry experts suggest that it is wiser to buy properties when the EMI is lower than the rent you could earn. That way, it simply makes sense to buy a house and put it up for rent.

Affordable homes on the rise

India’s affordable housing is set to break all records in the coming days after having attained the infrastructure status. The ‘Housing for All by 2022’ initiative brought about by the Central Government along with initiatives like redefining of categories like Economically Weaker Section will be instrumental in incentivizing and encouraging tenants to become home-buyers.

Real estate developers like Lodha are also developing innovative, cost-effective and buyer-friendly ways to deliver properties to their customers with low overheads and on-time possession, making it an attractive proposition to the buyer.

Attractive Lending Rates

Following the spike in deposits after demonetization, a lot of the top banks in India have reduced their home loan lending rates by about 90 points. The government has also introduced subsidized schemes for new home buyers with the monikers Pradhan Mantri Awas Yojana (PMAY) Scheme that can be availed by new home-buyers through either a developer, a secondary market or for the construction of a new house.

Stability in the Industry

Owning a home is always more advantageous in the long run because real-estate prices are only soaring, and with the inflation in the economy, you would never be getting less than you paid for your house. In addition to that, you can also make any modification you want to your house without thinking twice as long as it abides by the guidelines of the municipal corporation. Property investments also give a steady appreciation, and rents may rise but fixed mortgage cannot.

New Regulations to Safeguard Home buyers

The new Real Estate Regulatory Act or RERA has been designed by the Indian Government to keep a check on developer wrong-doings and protect the buyers, allowing them more benefits during a purchase. For instance, if there is a delay in handover of the property, the developer is now liable to pay the buyer the same extra amount as the buyer is supposed to pay the bank back.

Featured Image Credits: Pixabay