Buy, hold and build your own home

MEERA SIVA | Updated on March 12, 2018 Published on October 12, 2014

Constructing a house, rather than buying an apartment, is a dream for many. A house with a garden can be within your reach — if you invest in a plot ahead of time.

Plotting the dream

Once you own a plot, building a home is not very expensive. Construction costs vary depending upon the location and the material used, but it averages ₹1,500 to 2,500 per sq ft for mid-range houses. So you can construct a 1,000 sq ft home with a car park for under ₹30 lakh.

You must, however, invest in a plot early in your career by taking a land loan. And, based on how infrastructure develops in the area, you can decide on a suitable time to build.

It typically takes two years for you to build a house, including the time spent in getting the required approvals for building and the actual construction.

During the intervening years, you can fence the plot and plant trees, which will help secure your land. By building a home, rather than selling off the plot to buy a flat, you can retain the land value over a long term.

Buying to build

There may be a few differences between buying the land as an investment and buying with an intention of building a home. For one, if you plan to construct in a few years, a prudent choice may be to buy a plot where the social infrastructure, such as hospitals and shopping, are well developed.

This may be more expensive than buying in a far away place, but it may be safer and make every day living easier.

Also, plots close to the main road appreciate more compared to those that are a little far away. However, this may not be the best choice if you prefer peace and quiet. Instead, it may be better to buy in a street that is slightly away from the main road.

Another factor typically overlooked when buying a plot is the issue of water. You must enquire about the availability and quality of water in the area. While this is not a critical element if the plot you buy is for investment, water is important if you plan to build — both for construction and everyday living. You also need to check if the plot is in a low lying area and examine the condition of the area during the rainy season. Raising the ground level in a low-lying area will add to your construction costs.

The type and quality of soil must also be looked at since the weight-bearing capacity is decided by the soil. The type of foundation which determines cost and expertise of the contractor you will require, is based on the soil type.

Also check if the land is level — not uneven or sloping. Unlevelled ground would require you to spend resources for preparing the ground for laying the foundation.

You must also check the Floor Space Index (FSI) norms and clearances needed for construction in the locality. This will help you decide on how big a plot you need for the house you plan to construct.

If you plan to sell a portion of the plot to help fund your construction, you must check if there are any restrictions to do that.

For example, the divided plots need sufficient area facing the front, also known as frontage. In Bangalore, the Revised Master Plan of 2015 requires that a bifurcated plot shall have a minimum of 6m frontage.

Funding the construction

You can take a construction loan to fund your building costs. However, tax benefits are delayed for building a house in comparison to buying.

The interest accrued during the construction period can only be claimed as deduction over five years in equal instalments starting from the year of completion of construction.

Also read: >Get the plot right

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