State governments should reduce levies and fasten the approval process for the mid income housing to pick up , said top property developers and consultants. 

With premium and luxury housing seeing strong growth, and Central Government bringing out various schemes to provide housing for lower rungs of the society, housing is Rs 50 lakh to Rs 75 lakh is facing headwinds due to high interest rates and lower supply in top cities , developers’ said.

Early this week, the Union Government announced assistance to build 3 crore houses in urban and rural areas iunder Pradhan Mantri Awas Yojana (PMAY) to promote affordable housing.

“Cost or approvals and charges such as development premiums constitute more than 50% of cost of a house in big cities They should go down,” said Niranjan Hiranandani, managing director at Hiranandani group.

Hiranandani said states should follow Maharastra government s example of cutting stamp duty during the COVID which improved residential sales in Maharashtra. Maharashtra cut stamp duty by 3% from September 1 to 31 December 2020 and by 2% from Janaury 2021 to March 2021.

“Approvals are taking too long . Ease of doing business should be improved,” Hiranandani said.

Too many approvals

Sanjay Dutt , managing director and CEO at Tata Realty & Infratructure said developers have been asking for single window clearance for their projects .

“A key area for improvement is the approval process, which currently involves obtaining multiple clearances from various government agencies. Consequently, this sometimes lead to extended project timelines and increased costs,” he said .

Real state comes under the jurisdiction of state as the land zoning, town and country planning at state regulates, and related approvals predominantly come under various departments of the State. “Within state, we have jurisdiction within municipality limits or outside under panchayat”, Dutt said.

He said developers need to secure approvals from central government agencies including environment department , Archaeological Survey of India, national monument,  Ministry of Defence,  and so on.,”. None of the above are aligned. You can get approval from one agency but may get stuck at another,” he said.

The Government at the centre and the state, if happens to be the same, is generally viewed favourable. If not, leads to delays, he said , adding. “There is lot of political vested interest in real estate and that is why when elections come, real estate goes in coma.”

Higher levies

Gaddipati Hari Babu, president of National Real Estate Development Council said including stamp duty of 5% , many states are charging 12 to 14 % as different levies on selling price. 

“if you buy a Rs 50 lakh apartment, 14% levy comes to Rs 7 lakh.. this is besides GST paid by us on construction” Babu said .

States should reduce levies and make it maximum 10 to12% , then sales will rise and they can earn more revenues, he said, He said approval process is complicated in most of the cities which needs to be simplified.

He said people are not buying houses because of higher interest rates. “Earlier rates were at 6.25%, now it is 9%. It should be 5% for first five years for houses upto Rs 60 lakh and after five years, it can up to 6.25%, ” he said.

Anuj Puri, chairman of Anarock Property Consultants said: “Reduced stamp duties and registration fees can increase demand by making housing more affordable. Balanced development and the improvement of livability necessitate improved infrastructure and urban planning.”

Home ownership sentiment can also increase by streamlining lending procedures to increase access to credit. The availability of flexible repayment options and provision of more subsidies or incentives for first-time homebuyers would increase demand and promote faster development in the housing market, he said.