Editorial & Opinion

A Home To Fit A Budget

A Home To Fit A Budget 1
Image credit: C Sunil

Kotagiri, Nilgiris District, Tamilnadu:

What does it cost to build a house that builders market as a “dream home?” Depending on the region, pricing of building, that includes material and labour, builders price it anywhere between Rs 2,000 and Rs 2,400 per sq foot. Only very few builders offer this cost as frozen completion pricing. Escalations are passed on to the unwitting homeowner, who probably would end up incurring additional debt and interest costs.

Most builders seldom give out the disaggregated costs of materials, including fixtures like taps and lighting. In fact, even real estate supplements of publication of  The Hindu and Times of India never reveal the actual costs. Most of the real estate publications have little relevance to the home buyer’s affordability, but mostly serve the extended marketing interests of realty companies and the advertising interests of the publications. Transparency that is often preached is compromised.

Consequently there was only one way to ascertain the actual cost of a home. That is by taking the plunge or  “Do it yourself (DIY) route.” That is precisely the route this writer took. It was a huge financial risk, but having dived headlong, there was little alternative to swimming.

The first phase was getting home plan done. As a firm believer in minimalism, a home needs to be tailored to a budget instead of the reverse. This is to ensure that the costs itself are contained within the limits of affordability or even less. Secondly, the home needed to meet the requirements of a joint family, since it eliminates wastage, and fosters collectivism/cooperation. The Israeli Kibbutz concept had an overwhelming influence on the plan.   

For meeting these basic requirements, a plan was prepared for 1,300 sq feet. Accordingly, the plan was to have a 800 sq feet at the ground floor with a common living room integrated to a dining and kitchen and three separate bedrooms with two on the first floor. For making this plan one does not need an architect, one can use a certified civil engineer for the optimal cost. To make the blue print, the cost was just Rs 3,000. An architect would have probably asked lot more. And architects with brand equity, would have been far more steep. Since it was a minimalist home, there was obviously no need for such high value architectural plans. Above all, the entire project was funded from equity in other words, own savings !

It was armed with this plan and the limited financial resources that I made the application to the Panchayat through the block development officer. But to be honest, government bodies or local bodies function only to create obstacles and seldom to facilitate low cost options. The reason is obvious. Local body officers and government officers resort to extreme extortion from applicants for clearing plans, without evaluating the merits. The only merit that is applied is the amount of cash. So in this case, the wait was a year long. The wait did not end there. Once the proposal was approved, the next stage was in obtaining an electricity connection. That was another 7 months ! It was literally a precipitous wait, because the approval was valid only for one year !

However, what favoured me in executing the project was the demonetisation of bank notes of Rs 1,000 and Rs 500 in November 2016. The demonetisation move braked all the cash driven speculative construction activities though not to a complete halt. Yet it had its positive fallout. A redundant construction labour allowed for negotiation of labour contracts. Previously, few construction contractors were ready for labour contracts alone. They preferred whole building contracts, where the margins were high, especially through over invoicing of material pricing. Typically, construction contractors, marked up material prices anywhere between 25 and 40 per cent. So a bag of a cement that would have cost Rs 350 inclusive of GST was priced by the builder at Rs 450. Ditto in the case of steel and manufactured sand that were also marked up equivalent per centages.  The slowdown in construction activity allowed for negotiation of labour contract of Rs 350 per sq foot. 

After finalising the labour contract and freezing the same, to obviate future disputes, the next objective was to assess the material requirements. The material requirements were estimated at 20,000 red bricks, 3,5 tonnes of steel, (8 mm, 12mm and 16 mm thickness). The average cost of steel at Rs 42 a kg inclusive of GST was a little less than Rs 1.44 lakh with delivery on site. The cement requirement was 350 bags at an average price of Rs 373 a bag inclusive of GST. Although, the construction contractor pressured me to use river sand, I resisted and opted for manufactured sand or M-Sand. I also drew his attention to the elevated road construction in Coimbatore bypassing the dense city traffic. The entire construction is done using m-sand. A casual conversation with the site engineer was very revealing. M-sand provided greater strength to load bearing structures as opposed to river sand since salinity was low. 

Cost, however was not the only criterion that weighed. River sand mining is illegal not just in Tamilnadu, but in the entire country. Therefore, a river sand buyer becomes an accomplice to an environmental crime or vandalism. Finally a truck load of river sand or what appears to be river sand is priced at Rs 50,000 a truck load . Few though are aware, that much of what was being sold as river sand was washed sea sand. Usage of sea sand would inevitably compromise structural integrity. So it is not surprising that all “river sand” sale is on a cash-only basis. In the case of M Sand, the pricing is substantially lower, depending on the grades. High gravel sand is priced at Rs 9,000 a truck load with delivery on site and Rs 12,000 a truck load. For building a home, it is best to use mixture of both. The effect was that the average pricing came down to Rs 10000 a truck load. For the building we used 6 truck loads of M-sand. 

We also did not use red bricks. Again our (family) collective environmental conscience determined our decisions. The option was to use ready made cement blocks. However, cement blocks were heavy and transport costs would therefore be high. Trade in red bricks and cement blocks continue to be in cash. In the case of red bricks, the cash preference is largely because, brick kilns are illegal activity in many parts of the country . Beside, red bricks essentially result in removing the top soil. That would be violation of the environmental regulations. 

Besides, what we also wanted to explore was the option of reducing cement consumption for the building. So are there alternatives that fulfilled these criteria ? A little bit of leg work powered research yielded results. The material was flyash ( a byproduct from thermal power generating stations) concrete blocks. There are four well known brands of these blocks available. Aerocon, made by the C K Birla group, Siporex India Private Ltd and Renaatus Procon Private Ltd. The block sizes available standardised to 2 feet length. As for width, all four of the companies offer width of 100 mm, 150 mm, 200 mm and 225 mm. In making the choice of blocks, price alone cannot be the criteria. We opted for Aerocon blocks, which was priced a little on the high side, but also because, the dealer was prepared to make an on site delivery free of cost. Each of those blocks costed about Rs 115 per block. These blocks also came with proprietary mortar. 

After a site visit and evaluating the blue print, Mr. Manikanttan, Build Tek Solutions, the dealer for Aerocon from Coimbatore, Tamil Nadu, assessed the requirement at 1,800 blocks and 48 bags of proprietary mortar. The total cost was Rs 2.17 lakh. Usage of these blocks cut the cement requirement by 100 bags. The swing for Aerocon blocks was also influenced by the friendly demeanour of the dealer, and willingness to accept late night calls on product queries. But there were some associated problems. Orders for the blocks need to be placed well in advance. This is true of other brands as well.  So timing of the construction process was essential. Consequently the orders for the blocks were placed even as the construction of the columns were underway. This was to ensure that the work continuity is ensured after curing of the columns. This would in turn eliminate cost over runs due to delays.

The final construction of the building was completed well on time, before the expiry of the approval date. However, the next stage was getting a right flooring, plumbing and electrical fixtures. Flooring materials are available to suit all kinds of budgets, to suit the most expensive to the bare minimum. But the minimalist approach does not necessarily mean using dung flooring. It is actually the best, but maintenance is high. Besides, dung flooring leads to dampness. So may be suited only for well ventilated houses. However, it doesn’t mean that tile or granite flooring are the best options.  A single vitrified tile or granite for flooring costs of 10 mm thickness costs starts at Rs 40 per sq foot and goes all the way up to Rs 5,000 per sq foot, although they give an expensive touch to the house. For those chasing a budget target, tiles are therefore out of the reckoning completely. 

Yet durability and elegance are not assured by only tiles or granite or wood based flooring materials. Old constructions have used oxide based flooring. In coastal Tamil Nadu, Kerala and Andhra Pradesh, homes have withstood the fury of the coastal climatic vagaries and have endured them without losing the gloss. The cost of oxide flooring was Rs 500 for 10 kgs. They come in red, green, black, blue and even yellow. For the entire 1,300 sq feet, the requirement was just 17 kgs. That made the total cost just Rs 800. But the oxides are mixed with the cement. That was just three bags of cement or Rs 1,050 !  Moreover, Oxide floors look elegant and are easy to maintain. Regular sweeping and mopping are enough to keep it in good condition for years. The finished floors usually have a lustrous finish that gets better with time . 

Finally, minimalism and a tight budget does not mean cheap fittings. WaterTek India was the brand, we zeroed in on. Water Tec had taps for prices as low as Rs 250. They are made of poly viny chloride, and can withstand high temperatures of the solar water heater for extended period of time. Ergo for electricity connections as well, which was done using domestic branded cables to support. The total cost of both electrical and plumbing fixtures was contained Rs 1.5 lakh. Where costs went overboard was in the painting. In choosing the painting the focus was to provide protection against heavy torrential downpour. Although the average rain fall in the region has seldom exceeded 2,000 mm a year, we factored in 3,000 mm in view of climate change effects. So the painting cost, especially the outer coat turned out to be on higher side. The cost of paint alone came close to Rs 2 lakh including reinforcement for damp proofing. 

At the end, the completed turnkey cost of the house was Rs 1,800 per sq foot or Rs 23 lakh. This included the cost of the water supply, riveting walls, rock belting costs and cost of land.  On hind sight, perhaps we could have brought costs down even lower. This was because there were wastages, and high material transportation costs. Wastages of sand, building blocks and even steel were at least 10 per cent of the original estimates. At the end of the construction, we were left with two bundles of 12 mm steel, 20 blocks and another 10 bags of cement. Only the cement could be returned. But then the transportation costs would have to be incurred.

In the plains and urban areas, actual cost for a home should ideally be far lower. In reality though it is the builder margins rather than actual costs that determine final pricing.

As a professional financial journalist, I was used to chasing only deadlines. But chasing a target with limited resources was daunting. There were tense moments. And to surmount these moments  and and seamlessly implementing this project, we had help, succour and even consolaition during period of extreme stress. That was from a friend in the village, a farmer , Murugesh, whose extraordinary common sense driven wisdom far exceeded those of the educated elite. At various points he stepped forward and mitigated fears that the targets would not be met. He proved right, very right !

What was also a revelation was the margins that builders make. Clearly this entire exercise proved that builders margins were way in excess of supernormal, all in cahoots with banks, government officials and obviously the media, all at the cost of the hapless homeowner ! 

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