Hit hard by the current slowdown as well as recent policy reforms such as RERA and GST, the nation’s real estate sector is betting big on the Budget 2018, to be presented by Finance Minister Arun Jaitley on February 1, for revival of fortunes. Keeping in view the Modi government’s thrust on affordable housing, combined with its Housing for All by 2022 mission, the sector is looking for some sops in this year’s Union Budget.
Industry experts are of the view that although growth of real estate remained muted during the first few quarters of 2017, largely owing to the demonetisation effect, however, sales are likely to improve going ahead as consumer confidence improves because of RERA.
Amit Modi, Director, ABA Corp and Vice President, CREDAI Western UP, says, “The last quarter of 2017 for the real estate sector seems encouraging. Going ahead in 2018, demand is expected to go up and consumer confidence will improve. To further improve the investment and taxation climate in the realty sector, we hope that FM Arun Jaitley will make some major announcements in the Union Budget 2018.”
Here are some of the expectations of the real estate sector from the Budget 2018:
Single window clearance: According to developers, the need of the hour is a ‘single window clearance’ for the sector as a single window clearance mechanism with bare minimum human interface and precise deadlines for approvals is very much required to bring down the time of project delivery and curb any scope for undue gratification in granting permissions. “At present with the multiplicity of permissions and approvals that project developers are required to secure, it could take anywhere from 18 months to 36 months before the beginning any project. Therefore, the government should try to put in place a single window clearance system for building permissions so that developers as well as end consumers could benefit from lower approval time. The speed of construction and the costs involved are important parameters as they dictate the ultimate affordability of homes as well as the financial viability of the project,” says Modi.
Exemption limit on interest on home loan: To support millions of first-time homebuyers across the nation, the government should increase the limit of tax deduction for housing loans up to Rs 5 lakh from the present limit of Rs 2 lakh per annum. A similar limit should also be set for principal loan repayment which is Rs 1.50 lakh at present.
Industry Status: Allotment of ‘industry status’ to the sector has been a long-pending demand of real estate players. Not having an ‘industry status’ makes it difficult for the real estate sector to avail legitimate finances from banks and other financial institutions. Hence, “according industry status to the sector can help it in getting low-cost loans and in turn reducing project costs, which will finally benefit buyers,” says Modi.
Housing for the needy: ‘Housing for the Needy’ should be a prerogative over the government’s ‘Housing for All’ mission. The government will have to address devising practices that will keep a check on the subsidies being rolled out under this scheme. Only those in need of this rightful exemption should be given the rightful preference over individuals who can afford a home at fair market price. “Even if 20% of the Pradhan Mantri Awas Yojana is implemented, we can witness a GDP growth of at least 50%. However the government should focus on markets like Andhra Pradesh, Telengana, West Bengal and North Eastern States to exploit the latent potential in these markets and make them pivotal in their contribution towards improving the quality of life in India. The development of these states can drastically influence the overall growth of the country,” says M Murali, Managing Director, Shriram Properties.
Reduction in GST rates: As of now, under-construction properties are levied a GST of 12%, which is significantly higher than the previous taxes. “The government should strive to make GST a tax-neutral proposition so as to help in reviving demand in the realty sector. Clarity and transparency on input tax credit will also help in rationalizing the taxes,” says Anuj Puri, Chairman. ANAROCK Property Consultants.