One of the most awaited events of the year, Union Budget 2016-17 is expected to metamorphose the country’s real estate landscape from its current recessive state to a progressive sector. A revival in the real estate sector would impact multiple businesses, while giving a massive fillip to the overall economic growth of the country. Towards this end, we are looking forward to manifold policy changes in the Budget.
Industry status for realty
This has remained an unfulfilled wish of the real estate sector for long. An ‘industry’ status will serve as a game-changer since cost of funding provided to developers will come down significantly, and they can, in turn, pass on the benefits to the consumers, propelling sale volumes.
Single Window Clearance
While land and construction costs make up majority of the share of the overall cost, construction delays add to the woes of home buyers. Undoubtedly, the procedural inefficiencies in the system can be held culpable as developers have to acquire multiple approvals from numerous authorities and obtaining the requisite clearances can run into months and years.
Reduced home loan rates
The Reserve Bank of India took progressive steps in 2015 to augment the realty sector by slashing repo rates. However, not many banks have passed on the actual benefits to buyers.
The benefit should be passed on to the developers as well. With availability of cheaper finances, developers would be able to price properties competitively.
Passage of Goods and Service Tax Bill
Currently, home buyers are liable to pay multiple taxes on purchase of under-construction properties. In addition to the Stamp Duty and Registration Charges, other taxes such as Service Tax, VAT, Excise Duty, Custom Duty and Entry Tax, among others, are levied on home buyers. This combines to form about 22-25 per cent of the total cost of the unit. Since the focus is on affordable housing, the government must take measures to get the Goods and Service Tax Bill passed in the Rajya Sabha.
Implementation of REITs
Despite being announced last year, Real Estate Investment Trusts (REITs) have not kicked off in India. The investment tool, which holds the potential of single-handedly driving the market towards revival, is pipped due to the presence of Dividend Distribution Tax (DDT). In order to spur REITs, it is essential for the government to make it more investor-friendly by providing tax sops.
Passage of Real Estate Regulatory Bill
Passage of the Real Estate Development and Regulation Bill, is another long-pending demand, which if accepted would make real estate more transparent and organised. While the multiple amendments made in the Bill have boosted confidence among buyers, it is essential to implement it at the earliest.
The real estate watch dog or body must be adequately staffed and given full powers to protect consumer interests such as refund of full money with interest in case of inordinate project delays and also for shoddy construction by builder. Lack of this is seriously impacting consumer confidence to buy new properties – especially their ability to protect themselves in case of contractual disputes with builder.
The author is Chief Business Officer, 99acres.com