Union Budget for the real estate market
Everyone is eagerly waiting for the union budget which is soon going to be revealed. Demonetization has had a significant effect on the finances of the country and an impact has been seen on every sector. The union budget will give more clarity about the finances. Sahil Kapoor, Executive Director RE/MAX India talks about the expectations from the union budget for the real estate market.
Ever since RERA has been passed, the real estate industry has been going through a paradigm shift and a lot of answers are expected with the release of the upcoming Budget. With developers coming under the RERA scrutiny, there is a lot expected when it comes to approvals and clearances. In particular, we hope that government initiates the Single Window Clearance for smooth approvals and timely delivery of projects. As a Real Estate fraternity, we hope that this budget beings with it positive sentients and builds the customer trust back in the Real Estate Sector. The budget is expected to build around the lost faith of the buyer’s post Demonetization by incentivizing the home buyer with lower interest rates. Also, the first time home buyers particularly are expected to have a benefit with higher tax exemptions from the next financial year.
The union budget is expected to support the first-time home buyers. Their first house might get them additional income tax incentives for the first few years. The developers could also then come up with the products that suit the requirements of the youth to attract this segment of home buyers.
So far, in case of project delays, there was no concession or protection for the end users. This led to payment of extra taxes and other personal difficulties as well. The new budget is most likely to extend tax rebates in the projects that get delayed due to strict RERA adherence as well. If the government wants to fulfil the dream of “Housing for all by 2022”, then the union budget has to be made Real Estate friendly so that it’s beneficial for all.
The tax deduction limit for the housing loans should also be increased for buyers in the metro cities. Currently the limit is 2 Lakhs, which is insignificant considering the ticket size in the metro cities, where usually the houses go upto 1 Crore. Addition benefit on house insurance will encourage people to get their house insured and protected.
Currently, the HRA (House Rent Allowance) is not provided to all the salaried people. The one with a HRA avail tax benefits, but those who get a lump sum, without any breakup of the salary, they are just liable for a deduction of Rs 5000/month, which isn’t realistic, keeping in mind today’s housing rent. The union budget should be more in support of people with no HRA.
Moreover, in the long term we expect income tax rate rebates, Stamp duty reduction, GST rate to be finalized, tax concessions on house insurance premiums could be introduced to encourage end-users to insure their homes.
With the upcoming budget, we expect to get the industry status as deserved with all the economic reforms taking place. This will help in pushing the housing demand and eventually lead to growth of the industry. The announcements made by the Prime Minister MR. Narendra Modi will help the ultra affordable segment a lot. The Home Loan rate cuts are having a positive impact on a wider customer segment. We just look for the confidence boosting measures by the government that will put more money in the hands of the home buyers and hence improve the home sales. the government needs to address the issues post demonetarization by encouraging the customers to have trust again and park their funds in real Estate.