The FINANCE minister’s Budget proposals, by according infrastructure status to affordable housing and redefining carpet area, are likely to bring down costs for developers and incentivise home ownership, financiers said.
Vaijinath MG, chief general manager for home loans at State Bank of India, said that the proposals need to be read with other incentives for home ownership announced by the Prime Minister on December 31. “Those benefits were given to the individuals and they were meant for the buyers. The Budget has taken care of the supply side. Classifying the affordable housing projects as infrastructure will help flow of funds in this sector and that will bring down developers’ cost of funds,
In his Budget speech, the finance minister said, “Instead of built up area of 30 and 60 sq metre, the carpet area of 30 and 60 sq metre will be counted”. Moreover, the 30-sq-metre limit will apply only in case of municipal limits of four metropolitan cities while for the rest of the country, including in the peripheral areas of metros, limit of 60 sq metre will apply, Jaitley said.
Gagan Banga, vice-chairman and managing director, Indiabulls Housing Finance, said, “Allowing property owners the benefits of capital gains after two years will also boost ownership in a country where real estate is still the most trusted investment option.”
The proposal to increase the allocation to Pradhan Mantri Awas Yojana to R29,043 crore from R20,075 crore in the previous year is expected to help increase the market for affordable housing.
R Baskar Babu, “This is a re-emphasising of the focus and it augurs well for all of us who are into affordable housing – those who are entering or those who are already into affordable home loans.”
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The proposal to make the National Housing Bank refinance individual housing loans of R20,000 crore is a big positive for the industry, Babu added.
In addition, the Budget said that SIDBI will refinance credit institutions which provide unsecured loans, at reasonable interest rates, to borrowers, based on their transaction history.