by Mr. G. KARTHIKEYAN,
Chartered Accountant,
Coimbatore
Housing finance is an area where ambiguities
exist - the very first, perhaps, is that housing finance can mean different
things to different people.
Buying a house may be the dream of a lifetime to
some, to some others it may be a tax planning instrument and to still others it
may be just an investment - depending upon their income bracket.
When the objective of the investment itself
differs from person to person, their perception of financing the investment and
the cost will also vary.
The fact that the layman is not aware of the
labyrinth of rules and regulations to be complied with prior to construction
only adds to this and makes the situation complex and open to
misinterpretation.
Housing costs have skyrocketed. At the same time,
housing remains one of the basic requirements of every human being.
People buy apartments, invest in land, or prefer
to build a home on the piece of land they call their own. While buying an
apartment is comparatively easier, building from scratch entails a lot of
ground work.
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| Mr. G. KARTHIKEYAN, Chartered Accountant, Coimbatore |
One of the most important processes to be completed before the
construction can start is to get an approval for the construction from the
local / city municipal corporation. This
can be a taxing process in every sense.
Assuming that someone has constructed a home and
simply wants to add a room or two more, the same laborious process of getting
approvals must be followed again.
Obtaining approvals for additional construction
is taxing because the additional built up area may not be substantial but the
process of obtaining the approval could prove to be expensive.
Additionally, if the house owner wants to finance
the construction with a loan from the bank, the approval becomes a must as no
bank would advance funds against unapproved construction.
Most house owners prefer to avoid the hassle of
obtaining the additional approval & prefer instead to either finance the
construction from own funds or to borrow from private financiers / housing
finance entities.
It goes without saying that these entities charge
exorbitant rates of interest and escalate the cost of construction manifold.
The dilemma, of course, is to determine how to
obtain affordable finance as well as timely approvals. Considering that
affordable finance depends upon approved constructions, it would be a good idea
to set up a single window clearance for additional construction approvals
sought at the municipal corporation level.
This would ease the glitch and allow faster
movement of papers for approval.
It would also serve a two-fold purpose in that it
would encourage people to seek approval and prevent unapproved construction
while at the same time ensuring availability of affordable housing finance.
It must be noted that currently unapproved
constructions constitute a significant portion of the housing scene in India.
While one does not endorse unauthorised or unapproved construction, it must
also be said that easing of the rules will, to a large extent, lessen/resolve
this issue.
About the author..
Mr. G. Karthikeyan, Coimbatore-based Chartered
Accountant
E- mail id: Karthikeyan.auditor@gmail.com
Web Site; http://www.karthikeyanjayaram.in
Karthikeyan & Jayaram is one of the leading and professionally managed chartered accountancy firms in India, engaged in providing Accounting, Taxation, Audit & Assurance, New Venture Consulting and Financing services. Since 1996, they have built a strong reputation in the field of accounting and have been recognized as a quality service provider on the global arena.
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