Social Pressure – “I have to buy my own flat.“
“I have to somehow get my own flat before marriage or soon after the marriage,” a statement that is common. In a complex society as ours, it is considered to be an accomplishment when a person can secures a dwelling for his own. Although economists and financial experts recommend that one can save a lot of money by staying in a rented house than going for an own house, the rationale behind this statement is ignored.
Housing Loan and EMI vs Rent
Much of our lives are spent on a saving for “own house” be it an independent house, villa or flat. One ideally starts thinking about it at late 20′s or early 30s, secures a longer tenure housing loan of typically 15-20 years. Arguably, we think it is okay to pay hefty Easy Monthly Installments (EMI) than paying rent. An approximate figure for monthly EMI for one (1) lakh ranges anywhere between Rs. 990 to 1400 per month for 20 years. So, if you secure a 30-lakh housing loan, you are expected to pay approximately Rs. 30,000 per month. Assuming a standard per-square-foot price for an apartment in and around the Chennai city to be Rs. 3000 per square foot, you can grab anywhere from a 850 to 1000 square-foot flat, comprising of 2 or 3 bedrooms.
Renting a 2 or 3-bhk flat would not normally cost one more than Rs. 12,000-15,000 within the city limits, exclusive of maintenance. Leasing is another convenient option one can look at, if you have enough liquidity at hand.
Monthly Maintenance Charges
With the popular community-style residential apartments featuring swimming pools, auditorium, banquet hall, 24×7 security, etc. brings you a bill for maintenance charges. Popular building promoters seem to charge anywhere between Rs. 2 to 7 per square foot. So, if you own an apartment measuring 1000 square feet and the maintenance fee is Rs. 3 per square foot, you are looking at paying Rs.3000 every month.
Apparently, the monthly maintenance charges will keep increasing from time to time as
We do not get into the matter of whether you are getting the services what you pay for!
In metros such as Delhi, Mumbai, maintenance fee for premium apartments is believed to have hit Rs 1 lakh a month. An article in Economic Times in 2013 quoted saying, “Maintenance charges at The Imperial, a residential building at Tardeo in south Mumbai, for instance, is as high as Rs 1.5 lakh a month for a 10,000 sq ft apartment. This isn’t an exception, but more of a norm, given the number of luxury projects that have sprung up in the recent years. Even the smallest 2,550 sq ft configuration flat at The Imperial shells out over Rs 40,000 based on monthly charges of Rs 16 per sq ft, says one of the residents of the building. In Gurgaon, too, some high-end properties charge Rs 7-10 per sq ft and the size of some apartments are between 4,000 and 5,000 sq ft.”
This is really an alarming situation for those jumping into the venture of securing a own house to save from paying growing rent.
Affordability Rate of a Common Man
What is evident is that the affordability rate for a common man earning anywhere between Rs. 15,000 to Rs. 30,000 per month is almost next to impossible, unless one is supported by a earning spouse and without/with any dependents with/without major health ailments. The poverty line determined by the Government is nowhere realistic and suggests an equivalent of Rs. 1500 per month. The author of this post is skeptical whether these kinds of social pressures are contributing to growing corruption and self-centered human population.