SELLNG WATER BECOMES LUCURATIVE PRIVATE BUSINESS

Business lawyers, senior advocates, property lawyers in Bangalore, property advocates in Bangalore

Most of the bore wells in and around Bangalore is dried  Some intelligent people who own a small piece of land dig very deep and huge bore well to do water tanker business are the cause of drying the other bore wells in around that area.

One resident claims that water supplier continuously selling water for two years in his area has become the owner of a multi-storied Apartment which has been constructed on his land. This gives an insight about the quantum of money he has earned and saved after meeting all his other necessities in two years, with no liability to Income tax or any other local taxes. Whereas the BWSSB not charging anything for these bore wells since it is on a vacant land and is not registered. On the other hand the dried bore wells of residents/apartments continuously receiving the bills for bore well even though it is not yielding any water.

Due to this lucrative income, private water suppliers have mushroomed across the city, and who come to your rescue in times of crisis.

The vast part of the namma Bengaluru depends on the water they supply. Some of us like to believe the public authorities when they try to deny the existence of ‘Organised group’ in managing water or garbage but their existence is a reality. They exercise a form of ‘public authority,’ by controlling the water supply? What is not clear is how mafia authority is enacted and maintained and, in particular, the relationships of mafias’ share with 'the state’.

Water tanker operators are often backed by the local corporator, the legislator, or a powerful politician. In some cases, political patronage is open. In others, patrons operate in the shadows. These groups have strict unwritten demarcated territories to operate.

The Boost of Real Estate Activities in the outskirts

Most of the colonies mushroomed on the outskirts of Bangalore are totally dependent on the ground water supply only. The BDA has not recognised approximately 90% of residential settlements at Bangalore’s periphery – around 500 square km and a population of two million – have developed the way they have, and considered as  'unauthorised.’

Certain residential layouts acquire greater legitimacy than others through the exercise of public authority. The local governments accept the property taxes paid by informal resident, tacit sanction from an urban authority, investment in roads or water supply by a local politician, or protection offered through networks of political actors.

All settlements exhibit varying shades of legality and tenure security, depending on the sanctioning authority. In fact, even the so-called formal BDA layouts possess varying shades of legality. Due to this fluid situation that water tanker has been able to flourish and service the majority of peripheral settlers. The key to the success of Water tanker owners is their complicity in both water and land regimes. From the early 1990s, the deregulation of land has fostered crony capitalism in the real estate sector, and has provided ample opportunity for speculative and exploitative land deals. This has further bolstered the authority of water mafias.

The BWSSB services approximately 5 lakh domestic connections with 900 million litres a day of treated water from the Cauvery River, only 10-30% of households at the city periphery have access to BWSSB’s water. Here, most depend almost entirely on groundwater sourced from household bore wells, municipal or village bore wells, and water tanker suppliers to meet their domestic needs.

The water tanker owners are tapping the aquifer quite indiscriminately in the absence of groundwater regulation. This has encouraged households, apartment complexes, commercial establishments and water tanker businesses to tap the natural resources. The average consumption of ground water is estimated over 600 million litres per day in Bangalore, which is approximately half of BWSSB’s water supply. Over the years, water table has plummeted.

The domestic bore wells are not on public domain on where tanker businesses source their groundwater from based on their customer requirements. An estimate by the BWSSB suggests that there are around 200 private water tanker businesses in the city, each operating two to three tankers. The Tanker business work round the clock, making delivers to 15-20 houses per day at approximately Rs.250-300 per load which may contain approximately 4000 litres of ground water. On an average he middle class people spends around Rs.1000 to 1500/- per month for procuring water from the tanker business. They generally use only tractors in order to approach informal settlements through unpaved and rough roads.

Running a tanker business is lucrative. The inputs are virtually free. Only a mobile phone and one or two water tankers are enough. On a typical day, a tanker owner operating in a densely populated residential area can make around Rs 8,000-12,000 depending on how many tankers he owns. If the business is able to pump groundwater through subsidised electricity or diesel-powered generators, the only cost is the diesel required to fuel trucks or tractors. Since diesel is also subsidised, profit margins can be quite substantial.

Territorial discipline:

Like any other business they too have stiff competition. So they want to have this competition within their territory and they will not step in to others territory. There is unwritten agreement to maintain their jurisdictional territories. They too have strong customer base. They claims to be social workers since they help the citizens neglected by the authorities. They have friends in administration and elected representatives on whose patronage they enjoy.

Artificially creating scarcity to maximize their business.

The tanker operators also collude with lower-level officials to restrict water supply so that they could offer the alternative and payments from consumers were shared with these officials. There is no difference between a politician and people like water tanker operators. Because once you have money, you can get power and become something, and once you have power you can get more money. Power is very necessary. That is the game of the day to become powerful politician and vice-versa.  

Deed of Covenant for Production of Title Deeds

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The transfer of immovable property by way of sales, gift, will, releases etc. presupposes that documents to the title of transferred immovable property are delivered to the transferee on completion of process. This is statutory obligation. Section No. 55(3) of Transfer of Property Act, casts this responsibility on the seller. But the section has a proviso that in case where only a part of the property is sold and the seller retains a part of the property the seller is entitled to retain the original documents, and copies of such documents are delivered to the purchaser.

In case, where the property is transferred to different persons, in different lots, the transferee of greatest portion is entitled to hold the documents of title and others are provided with copies of such documents.

In the circumstances dealt above, the persons holding the documents either the seller or one who hold the greatest portion has some responsibilities. He has to keep the documents in safe custody and in good condition. He has to make available the documents for inspection to other buyers, and also furnish the true copies of such documents; extract from such documents, whenever required.

But the cost has to be met by the buyer who needs such inspection or copies, extracts. Those responsibilities are required to be recorded properly.

The document, which records such obligations of safe keeping the documents; producing them for inspection, providing copies, extracts is called “Deed of covenant for production of documents.”

The deed of transfer like sale, gift, will, and release may contain such a covenant by the vendor in favour of purchaser or a separate deed may also be executed by the vendor in favour of purchaser.

In case of the person holding greatest portion, a separate covenant deed about his obligations becomes necessary. A separate deed in favour of each of other transferee of other portions or a common deed in favour of all other transferees jointly may be executed.

In the deed of transfer of the greatest portion or of highest value an explicit covenant, that, the transferee shall safe keep the documents in good condition, produce for inspection of other transferee and furnish true copies or extract should be included. Similar relevant covenant should also be incorporated in deed of transfer of other transferees.

Generally all the portions of the property are not transferred at the same time, and the above suggested procedure may not be possible. In such cases, the transferor should give a covenant of production of documents in each of the deeds of transfer and it should further provide that if and when the transferor hands over the documents to any other transferee at a later date he would procure a similar condition from the such transferee. Under a covenant of production of document, the original covenantor remains liable indefinitely unless a condition provides that he is no more responsible after he parts with the remaining portion of the property.

Stamp duty: In case the condition is included in the deed transfer itself, no separate stamp duty is payable. If a separate deed is executed, it attracts the stamp duty as that of an agreement depending upon the stamp duty prescribed by the state.

Registration: This deed of covenant does not require the registration, but it is advisable to get it registered.

Realty to survive in future

Business lawyers, senior advocates, property lawyers in Bangalore, property advocates in Bangalore 

The growth rate of the country’s population is prodigions. The Indian population grows at a every ten years rate of more than ten per cent, naturally needs to find a corresponding number of new homes over and above the existing number of residences of the previous ten-year period. In addition to the above core need, at least ten per cent of the existing number of houses require the need for reconstruction or replacement, to stand up to the changing tastes of youth who inherit the elder generation's homes. These two factors are considered to be favourable to the growth and sustenance of Realty Sector and constitute the mainstay of Real Estate Business demand structure.

The second factor makes very little demand for additional space. It creates only demand for construction activity. Old buildings are extended within existing land area or demolished and built vertically with more space added through the means of enhanced FSI.

Obviously the need of the increased population for housing units creates demand for new land for construction. But the availability of land for new construction has been shrinking over the past few decades, which forces the Governments to enhance the Floor Space Index for construction in many major urban areas. To add to this unavoidable phenomenon, Governments both at State and Central levels have been voraciously gobbling up all available lands under the pretext of Economic Development and Industrialization.

In the fond desire of generating sustainable employment State Industrial Development Corporations and others of the kind have taken away vast tracts of land out of the market, for preferential allotment to Industries. In spite of such supportive measures, an unconscionably high number of industrial units are today lying sick, with the land and other resources invested in them becoming unproductive. In addition, a high percentage of the developed industrial plots are lying unsold with the corporations. If the prescribed price of the plots for allotment of these plots, one will be wondering why these plots are remaining unsold.

Even with a conservative estimation, it could be said that thousands of hectares of developed industrial plots in most States are lying unsold, despite the fact of ridiculously low prices at which these are proposed to be sold.

There is something that does not meet the naked eye behind this queer phenomenon. There is a strong case for moratorium on further acquisition of land for industrialization until all the idle plots are allotted to deserving units.

Then we are witnessing there are the lands acquired for Special Economic Zones and Port Development. The special economic zones have run into a total failure. Everywhere there are erupting agitations against new land acquisitions. Cumulatively, all these factors join together effecting in the reduction of land available for the growth of new construction on the housing sector. Some serious steps need to be taken to address concerns of the citizens about land for their essential housing needs, which remain one of the three basic requirements for any human being.

The practical measures as mentioned above could well create a favourable situation of easing out the problem of land availability for new construction. The Policy makers while examining and formulating policy options, should keep in their minds the interests of the small dealers and facilitators. Adequate reserve land should be kept for the expanding growth of housing units which has to match the increasing population. This will forestall the future problems.

“BROCHURES” AS A PART OF THE AGREEMENT

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The Bombay High Court ruling treating brochures as a part of the Agreement will bring in greater transparency in the real estate industry, reports Yogesh Sadhwani.

Developers who over-promise and under-deliver better beware. According to a recent Bombay High Court ruling developers will now have to actually deliver on all the fancy promises they make in their marketing literature.

In his land mark judgment passed on March 16, Justice K.J. Rohee of the Bombay High Court ruled that though the brochure printed and circulated by a developer was not part of the agreement, but can be so treated

Justice Rhohee was hearing two petitions one filed by the residents of Maduvihar Co-operative Housing Society (CHS) against the developers, M/s. Jayantilala Investments and BMC and another filed by the developers against the residents. Both the cases dealt with construction of an additional building on the plot that was earlier5 depicted as open space and recreations area in the brochures.

While the residents contended that the additional building couldn’t come up on the plot as it was shown as open space in the brochures while selling flats in Madhuvihar, the developers said that they were within their rights to do so.

After hearing both the sides, Justice Rohee passed the Judgment in favour of residents. He not only asked the developers to convey the entire property in favour of the housing society but also restrained them from constructing anything on the vacant plot. The vacant space depicted by the developers in the brochures played a vital role.

The buyers have lauded this Judgment, while the developers say that only a small section of players who do not believe in delivering what they promise will be affected.

Advocate and Consumer activist Hemang Jariwala says, “While booking the flat, the buyers are show a rosy picture,. It is only when they sign the agreement, by which time they have paid a huge chunk of the consideration, they come to know that several amenities shown in the brochure has been deleted. A buyer has no way to back out. With the HC Judgment, however, the developers will no longer be able to take unsuspecting buyers for a ride.”

The real estate players, however, point out that only a handful of developers would be affected by the judgment. “Many time brochures are not indicative or reflective of the reality. This would affect only a few people. I don’t think the majority will be affected,” says Nirajna Hiranandani, MD, Hiranandani Constructions Pvt. Ltd.

Mukesh Patel, Knowledge Worker, Neelkanth Group says, “Whether it is a promise made in a brochure or an agreement,, a commitment is commitment and all reputed developers would live by them. But at the same there should be some flexibility, especially in terms of large layouts.”

Other believes that alterations in plans are not done deliberately. “The reason why most alterations take place is because there are changes in the FSI norms and thedevelopers obviously want to maximise their profits.

There are times when the developers have to alter the designs of the originally planned buildings to cater to certain class of people. In such cases if there is additional FSI left, they construct more later,” justifies Suresh Haware, Haware Engineers and Developers Pvt. Ltd.  He quickly adds that a handful of developers however, however, blatantly abuse the trust that the buyers repose in them.

Haware says that any sensible developer who is conscious of his image and wants to remain in business, will never deviate drastically from his initial plans or break his promise. “It is only a few who have tarnished the image of the community”, he says.

Similarly Savio D’Mello, Group Head of Ekta Supreme Housing, points out that brochures are printed on the basis of visual effect. “The exact dimensions are never mentioned. Moreover, all depends on sanctions from the civic body. All genuine developers deliver what theypromise and at the same time keep their own profitability in mind,” he says.

All the developers, however, admit from now on even the reputed ones, who never intend to dupe the buyers will have to exercise extra caution while designing brochures. Giving real estate an industry status and designing a code of conduct is another way to put an end to such problems and bring in greater transparency, concludes Haware.

Fraudulent builders soon to be black listed

The residents of the western suburbs in Mumbai have come forward to help the State Government in black listing the builders who have cheated citizens under the guise of providing houses under the Slum Rehabilitation Authority or SRA Scheme. The residents from Vile Parle, Santacruz and Andheri Station to the Governor S.M. Krishna’s bungalow at Malabar Hill on April 3. Though this yatra which will traverse 25 km, the residents want the entire city to know about the builders who have cheated them by making fake promises.

Mr. Asmitbhai Muchala, a resident of Gilbert Hill said, “We have come to know through the media that the Chief Minister during the State Assembly session has said that the builders who have cheated the tenants under SRA scheme will be blacklisted. Taking a cue from this, we have gathered residents who have been cheated by the builders and have planned to take out a rath yatra. We want to make people aware of the fraudulent behavior of the builders in the city.

Ms. Saira Patel, a resident of Andheri said, “For the past ten years, Srirang builders had promised me and other 100 residents proper housing under the SRA scheme, but there is yet no sign of any building coming upon the plot at Andheri.” She also said, “Our complaints went unheard in the past but this time we will take out a yatra and will present a memorandum to the Governor. We will also demand a thorough inquiry against the errant builders.”

Mr. Kantilal Maniyar, a resident of Santacruz blamed K.K. Developers of paying more attention to his private constructions which are ready for sale rather than completing SRA project. “He has neglected our housing and we are living in abysmal conditions in temporary accommodation since the last four years.”

The residents of the western suburbs also allege that these small time builders have made big money under the SRA scheme. The additional space which the builders get under the SRA scheme is frequently commercially exploited and sold by them. “The state government should make tougher guidelines for the builders so that they do not cheat us”, said Ms. Pate.

Defect in property is different from defect in title

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In recent times, dealings in real estate in Bangalore have been at the peak. Predominant reason for this is the growth of IT sector and the eagerness of the people to invest their money in real estates in and around Bangalore. As the real estates require huge investments, the purchaser has to take necessary precautions before investing his money to save himself from future complications. If the property transferred suffers from any defect in the title of the vendor, the purchaser does not get good and marketable title. Therefore, the purchaser has to make doubly sure before finalizing the deal, that the vendor has got a valid and marketable title. 

Marketable Title:

The term “Marketable title” means a title which is clear and free from reasonable doubts and is a title good against everybody. Thus, it is the title which establishes full ownership of the vendor to the property intended to be conveyed, without reasonable doubt. A buyer is not bound to complete the sale if there are defects in the title to the property which are material and latent. The defect to be material, it is to be of such a nature that if the purchaser were aware of it he would not have entered into the contract of sale at all.

Doubtful or defective title:

A title is said to be doubtful when the vendor does not have any conclusive evidence to prove the ownership.The defects in title are generally latent defects which can be found only on investigation of title by perusal of documents, by an eminent advocate, carrying out searches of Government Departments and Municipal records and by making reasonable enquiries. The vendor is bound to disclose such latent defects known to him.

A title becomes doubtful:

• Where the doubt arises by reason of some uncertainty in law itself;
• Where the doubt pertains to the application of some settled principle or rule of law.
• Where a matter of fact upon which a title depends is either not in its nature capable of satisfactory proof or is capable of such proof but yet not satisfactorily proved. 

The ownership of the vendor to the property intended to be sold, must be the property traceable from the previous title deeds commencing from the Deed which can be considered as a good root of title and for this purpose at least 30 years previous title would need to be verified. The property should have already been properly transferred from all predecessors-in-title and no third person other than the Vendor should have any right or claim thereto.

Thus, for example, if ‘A’ has sold the property to B and if it is found that the property under sale belonged to a Hindu Joint Family property and ‘A’ has sold it neither for  legal necessity nor after obtaining the consent from Co-Parceners, then the property sold to ‘B’ is said to be defective.

The following are a few instances where the title cannot be termed as defective:

• An omission to disclose a prior agreement for sale by the Vendor is not a defect in title.
• Title by adverse possession is marketable and not a defective title, if proper title by such possession can be successfully made out. A title may be good although there are no Deeds but there must have been such a long uninterrupted possession, enjoyment and dealing with the property as to form a reasonable presumption that the title  is absolute .
• Loss of title deed is not a defect, if the loss can be explained satisfactorily.

Defect in property:

Defect in property is different from the defect in title. A defect in the property only prejudices the purchaser in the physical enjoyment of the property but the defect in title exposes the purchaser to adverse claims. This difference has been enunciated in Section 55 (1) (a) of the Transfer of Property Act, which provides that the vendor is bound to disclose to the purchaser any material defect in the property or in the vendor’s title. The defects in property are generally patent defects which can be seen on an inspection of the property and the Vendor need not disclose the same so long as the same does not lead to defect in title.

Root of title:

In investigating title and in considering whether the title is marketable and free from reasonable doubts, it is necessary to find out the root of the title. Documents are considered as root of the title. A good root of title is a document purporting to deal with the entire property conveyed, which does not depend upon the validity of any previous instrument and without inviting any suspicion on the title of the Vendor.  It may also be described as a document of transfer of property showing nothing tocast any doubt on the title. An instrument, the effect of which depends on some earlier document is considered as an instrument with insufficient root of title. In India, there is no law which stipulates statutory period for examination of root or commencement of title. However, it is advisable to investigate the title for a minimum period of 30 years unless the circumstances warrant production of documents beyond 30 years. 

Though our law makes it obligatory on the part of the vendors to disclose the defects in title  before the  sale of a property, purchasers have also  to exercise due diligence and investigate the title of the property before purchasing the same, to avoid future complications.

REGISTRATION OF SALE DEED ALONE WOULD NOT GET OWNERSHIP

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The general perception amongst the people at large is that registration of the sale deed in the concerned Sub-Registrar’s office would conclude the formalities for transfer of ownership of the property from the vendor to the Purchaser or his nominee, but it is not so. The formalities in purchase of immovable property could be broadly classified into pre-registration formalities and post-registration formalities, compliance of both is a must for getting the ownership rights over the property transferred in totality in favour of  the purchaser or his nominee.

The term “Post registration formalities” refers to those activities which are required to be performed subsequent to the registration of the Sale Deed.  They are:

Obtaining original title deeds:

Once registration of sale deed is completed, the Purchaser has to obtain all the original documents of title from the seller and compare them with the copies which his advocate had scrutinized for rendering his opinion to make sure that the documents scrutinized and documents referred to in the Sale Deed are  the same and have been correctly spelt.  If his advocate had called for production of certain other relevant original documents or certified copies, the purchaser has to ensure that such documents are also made available to him for his custody.

Generally, at the time of entering into agreement of sale only certain basic original documents are made available to the purchaser along with copies of few  other documents and therefore, at the time of sale agreement, the purchaser has only skeletal original  documents with him and the remaining original documents will be with the vendor himself.  Thus, the purchaser has to keep in mind to collect all the remaining original documents from  the vendor at the time of registration of theproperty.

Upon registration of the property, the purchaser has to collect the original registered sale deed. In addition to this, it is better if he applies and gets a few certified copies of the Sale Deed for his custody and use.

Encumbrance Certificate:

Normally, encumbrance certificate for the period prior to the date of transaction will be made available for scrutiny by the vendor. In order to have Encumbrance Certificate with the reflection of the latest sale transaction between the present vendor and the purchaser,  it is suggested that the purchaser  may apply for up-to-date encumbrance certificate on the date of registration of sale deed itself so that he can avoid making another  trip to the office at a later date for the purpose. 

Physical Possession of the property:

Taking physical possession of the property is a very important step in a property transaction. Therefore, it is necessary for the purchaser to inspect the property at least a day prior to the date of registration to make sure that the property is free from occupation of any stranger and there is no hurdle to get possession of the property upon purchase.

In some cases, the property could have been under occupation of persons other than the owner/vendor like tenant or leaseholder, trespasser, etc. Irrespective of such occupancy by strangers, the vendor should be insisted upon to deliver vacant physical possession of the property at the time of registration so that the purchaser could exercise his right over the property and  take possession of the same immediately upon purchase and put his lock for the building.

In case of vacant sites, it is always  safe to fence such  sites immediately upon purchase, though it is a little expensive. In the alternative, the purchaser may display a board on a prominent place of the site clearly indicating that “This property belongs to  XYZ. Trespassers will be prosecuted”.

Periodical visits to the site are necessary to detect and prevent encroachment.

Security Deposit and Tax receipts:

Once a property is purchased, the purchaser is duty bound to make all the statutory payments due on the property to Government and other agencies. Therefore, the purchaser is to get confirmed whether property tax and other levies payable to Municipal authorities, BWSSB, BESCOM, etc.,  are paid up-to-date and upon finding that any payment is outstanding, either he has to make such payment himself or insist upon the vendor to effect such payments. For this purpose, the purchaser has to collect and verify the latest property tax paid receipt and all the relevant statutory payment receipts from the seller and upon visiting the concerned tax/revenue offices.

Khatha transfer:

Once the registration of the sale deed is concluded, the purchaser has to ensure that the Khatha of the property standing in the name of the vendor in the records of the concerned local authority is transferred to his name. For such a transfer, both the seller and purchaser have to sign the application for transfer of Khatha and it is better that such an application is prepared and signed at  the time of executing  the sale deed itself to avoid complications at a later date. The application for Transfer of Khatha along with a copy of the sale deed, duly filled is to be submitted before concerned authority within whose jurisdiction the subject property falls.

The Local bodies transfer the Khatha in the name of the purchaser upon collecting transfer fee which is, generally 2%, of the stamp duty paid on the Sale Deed and issue written confirmation of transfer in the name of the purchaser. Usually, the Local bodies  reassess the property and issue assessment notice in the name of the purchaser. The tax paid receipt should be in the name of the owner.

Water and Power Meters:

Once Khatha is transferred, steps for getting the water and power connections registered in the name of the purchaser are to be initiated. For this purpose, careful verification of the receipts issued by the concerned authorities for the deposit and charges in favour of the vendor is necessary to make sure that such receipts stand in the name of the seller. A letter of No Objection addressed to the concerned authorities by the seller for such transfer of water and power connections and the deposits made there under in the name of the purchaser is also necessary. The purchaser, along with the letter of No Objection from the seller and the latest Khatha Certificate has to apply to the appropriate authorities for effecting such a  transfer in his name at the earliest. Upon consideration of such a request, the authorities will issue a written communication intimating the transfer of water and power connections and the deposits in the name of the purchaser.

Though the above mentioned actions are simple in nature, to have peaceful possession and enjoyment of the property purchased compliance with these is necessary.

TAX DEDUCTION ON HOME LOANS INTEREST

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Incentives are offered under the Income tax Act on the investment in housing properties. Incentives come by way of deduction of payment of interest on the borrowed amount to buyor construct the house. Provisions relating to such deductions are provided in Section 24 of the Income Tax Act.The interest paid on a housing loan can be deducted from out of the taxable income of an Assessee according to this Section. The interest is permitted both on an accrual basis or due basis even if it is not actually paid in the year of accounting. To claim the deduction, the Assessee has to present a certificate from the Lender to whom the interest has to be paid on the borrowed capital pointing out the amount of interest paid or payable. The money should have been borrowed for acquiring the property or for constructing the property or repair of the property. Interest paid on a new loan taken to repay another existing loan is also permitted. The amount can be deducted in five equal installments starting from the previous year in which the house is acquired or built.

LEGAL QUESTIONS AND ANSWERS ON PROPERTY MATTERS

The first installment has to be deducted in the year of completion of property construction or the property is acquired and the remaining four installments in the four following years. Deduction for the full year is allowed even if one day is left in the year.The maximum amount that can be deducted is Rs.1.5 lakhs. The money should have been borrowed on or following April 1, 1999 for acquiring it or for the construction. It is necessary that such acquisition or construction should have been finished within three years from the end of the financial year, in which the capital was borrowed. It has to be certified by the Lender that the interest is payable for the loan advanced for acquiring or constructing the house.

The deduction amount is limited to Rs.30, 000 if the money has been borrowed prior to April 1, 1999. The date when the construction was started is not important. It is important only when the construction is completed within three years from the end of the financial year in which the money was borrowed. It is also not necessary that the whole cost to be financed though loan. Any portion of the cost of the house can be financed through loan.

It is advisable for purposes of tax to borrow and build or purchase instead of using one's own fund. The reason is that, if one uses his own fund he will not get any tax deduction from his total income.