Granting infrastructure status to affordable housing will give developers access to more funds
The Budget has been outstanding. All sectors have been covered, especially the rural sector and the agricultural economy. This is a government that translates words into action. Having said that, there has always been a focus on housing and infrastructure, so it did not come as a surprise to see such a large allotment made to infrastructure.
Granting infrastructure status to affordable housing will give the developer operating in this segment access to more funds from banks. Real estate funding and affordable housing are two separate entities. If affordable housing comes under infrastructure status, more funds will become available for this sector and the cost of finance will be much lower.
Last year, the real estate community celebrated the finance minister’s announcement of ‘30 square metres and 60 square metres’. We assumed he was talking about the carpet area, but it turned out that he was referring to the built area. This is a game-changer because 30/60 square metre carpet is different from 30/60 square metre built.
It changes the definition of affordable housing and will give a potential homebuyer the opportunity to live in a larger home.
Holding period for capital gains has been reduced from three years to two years. Since the government is looking to eliminate black money from real estate, this will go a long way in encouraging land transactions with 100% cheque payments. Also, the Joint Development Capital Gains Tax now only has to be paid on completion. This will encourage landowners to explore more joint development deals.
The Budget defined the limits for affordable housing of 30 and 60 square-metre houses. Outside the 20 km radius for metros, one can make a 60 square-metre house, whereas within the city, the size of the house has to be smaller. This is to get Section 80-IA exemption and encourage more developers to get into construction of affordable houses.
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In keeping with its vision of ‘Housing For All by 2022’, the government requires the construction of an enormous quantity of affordable homes. This will eradicate unregulated growth of slums. We expect the Budget to work out well for all citizens.
Irfan Razack, CMD, Prestige Group, And Chairman, CREDAI (National)