Personal Finance

Should you buy an independent house?

Meera Siva | Updated on May 19, 2018 Published on May 19, 2018

Look at the downsides such as managing and selling, before deciding

Buying a house with land is considered a flawless idea. Land price appreciates, you get to build and change as you desire, and have freedom in your lifestyle — all these make independent house ownership a dream proposition.

But times are changing and what worked in the past needs to be considered in the context of present conditions. For instance, cities are getting denser and growing vertically; traffic woes are only increasing and security risks are worsening. So you must prudently consider these issues and evaluate alternatives rather than just run with conventional wisdom.

Joy or ploy?

The first argument in favour of buying a plot of land and building is price-appreciation potential. It is true that availability of independent houses is limited. But they come with a higher price tag — typically over a crore — and hence potential buyers are also fewer. So the pricing power of the seller may be low, and importantly, it takes more time to sell.

Two, when buying a house, you may feel good that there is freedom to make changes to the floorplan. For example, we can add more floors or extend the house. But how often do you see this happen? Given the hassles in getting approvals and managing contractors, owners often do not take up alterations. Also, unlike earlier days when employment was stable, jobs are now mobile; so planning for a long time period may be difficult.

Three, apartment complexes typically charge sizeable maintenance fees, whether you use the various amenities, such as swimming pool, or not. There may also be wastages — water or common-area power — which may push up costs. In an independent house, you have control over the upkeep costs. However, to get security or have access to facilities such as power back-up, you may spend 2-3 per cent of the property value. So you may not save much net-net.

Four, when you construct, you have better control over the quality of construction and the material used. You can also decide the floorplan to suit your needs rather than go with limited options. But managing contractors is not easy. Labour and high-quality raw materials such as wood and marble may be expensive by over 20-30 per cent, as you would buy only limited quantity. In larger constructions, experts select and buy the right things; so at least with reputed builders you get good quality at a fair price.

Five, in an independent house, you are not bound by the rules of any association. For example, you are free to keep pets or paint the exterior as you wish. Also, you can have land for a garden and create greenery. While these are advantages, consider your lifestyle to evaluate if you will take advantage of these features.

Advantage apartments

Apartments have a lot of advantages that cannot be dismissed. For one, they are available at much lower price tags at similar locations, due to savings on land price. You also get amenities such as children’s play area, park, etc. If you want to live in more central locations, finding land for an independent villa may be difficult, or comes with a price tag of many crores.

Flats are also easier to sell/rent as there is a larger pool of interested people due to lower price and standardised features. You also need lesser legal diligence than buying land/houses, which may have ownership disputes. While issues such as deviations from plan or illegal construction could surface with apartments, the probability of complications are less, especially with the new regulations.

It is generally believed that apartment prices do not appreciate as much as land or independent house prices, as building value depreciates. However, a flat in a sought-after location with good quality construction and amenities, where infrastructure such as connectivity is developing, will attract buyers, and hence appreciate.

Apartment complexes also enable community activities. For example, children’s play area, indoor sports centre, walking space and clubhouses help you meet people. Resident welfare associations also conduct various celebrations which bring residents together. These can be pluses for senior citizens and those who are new to the area.

How to choose

An apartment may be a good default choice for many home buyers in the city — it is simple enough and the issues are understood. For those in smaller towns or who do not mind living in suburbs, an independent house offers a different lifestyle that has different advantages. Beyond the financial aspects such as initial cost, ongoing costs, price appreciation and rent potential, you must consider your needs, and buy based on your priorities.

Published on May 19, 2018
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