The Hindu Business Line : Shelter: Better to buy than pay rent

Romakanto Biswas systematically squelched any enthusiasm for any form of ownership. His stand seemed sound. "I came into this world empty-handed, and I leave empty-handed. If I acquire things, there will be a war among claimants," he said.

His colleagues would quip, "Kant never came empty-handed. He had loads of arrogance," "Roma strips his scooter apart every evening and reassembles it every morning to come to office," "Romakanto, you are terribly myopic but you don't wear spectacles. How come?" "Hey Kanto, how much rent do you pay for your vest and ... ?" and so on.

His colleagues would sing, "Roma was a rolling stone/Wher'ver he laid his hat was his home/And when he died? Only to leave us alone, alone, alone, alone, alone, alone... " Romakanto dismissed such attacks on his revealed preference with a wave of his palm or a smile.

It was, therefore, hardly surprising that he saw red when his better half broached the subject of owning a house.

Romakanto: Are you nuts, Subhadra? How can you even think of owning a house? Why do you even harbour such absurd ideas? I have already explained how any ownership leads to sharing problems in future.

Subhadra: Yes, I have been hearing that for years. You know how my relatives laugh behind your back because you refuse to buy a house, or an air-conditioner, or a washing machine or a television. Despite your status in the firm, you still drive the scooter your friend gave you some 30 years ago. Don't you feel ashamed?

Romakanto: Why should I feel ashamed? I am proud of Ramesh. He felt I needed the scooter more than he did... If my firm wants me to travel in a car, they will give me one.

Subhadra: Ramesh gave you the scooter because it was old and he bought a big car for his family. His wife asked him to sell the scooter but he found out he would get almost nothing. So he gave it to you.

Romakanto: How many such friends do you have? Don't criticise my pal.

Subhadra: In the last 20 years, we have shifted residence eight times. In some, we stayed less than a year, and the longest we stayed in a house was seven years. Now, we are paying Rs 6,500 as rent for a two-bedroom apartment. It is not enough for us. Our children have grown up and need their space.

And the owners raise the rent by 10 per cent every two years. We don't have access to the terrace, we can't put a nail on the wall, and we have to replace anything we break. The owners barge in like flying squads to check the apartment.

For a similar flat or even a small independent house, we would have to pay an equated monthly instalment of Rs 16,000.

Both our incomes add up to Rs 5 lakh a year. We can easily pay

Rs 2.5 lakh a year towards a loan of Rs 20 lakh for a small house today.

Romakanto: But if we pay Rs 7,500 as rent, we can get a larger house and there will be no headache of property tax, water tax, this-tax-and-that-tax.

Subhadra: But at least we will not have visitors at odd hours to check on their property. There will be no one to say that we cannot walk up to the terrace or to ask us to pull out a nail, re-plaster the damage and repaint the patch to mask it. And you will get the benefit of income-tax reduction.

The principal amount will qualify as investment and the interest component will be eligible for deduction as a loss for self-occupied house. Your tax will be close to zero. Now, you are paying a huge sum every month. So, it is a justified investment.

In addition, the property value will soar over time. In fact, the more you delay, the more difficult will it be for us to buy a house. Just see the property supplements and check how the guideline values are shooting up. And you know that the market value is much more than the guideline value.

Romakanto: But how will you divide the property between our three children? Will each of them get a third of each window and door, and a third of every tile on the floor? How will you assign a value to each section of the house? The rightful share should be one-third.

How will you ensure a fair share to each that will have an equal aesthetic value? This is a problem that needs to be considered. It is not a joke. I have managed to avoid this huge headache all these years. And now, you are trying to convince me to buy a house.

Subhadra: Why worry about dividing the property now? First, are you convinced of the need to buy property? If you are not, then I'll do it on my own. I cannot be paying a huge rent every month and be at the mercy of ruthless landlords. Just think of the number of times we have been asked to vacate the house within a month. I cannot take it anymore.

Romakanto: The money that we will waste paying equated monthly instalments to a bank can be used to buy equity shares from initial public offers by reputed firms. The value of carefully chosen stocks shoots up faster than the value of real estate. So, in the long run, an astute investor gains.

Subhadra: You don't have a nose for business, so don't even think about it; super clever investors lose lakhs in minutes. Anyway, of the three essential things needed by every human being - own food, own clothing and own shelter - we don't have the third and most important one. I need a shelter of our own. For all of us and quickly.

Racy@TheHindu.co.in

http://RacyCases.blogspot.com

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