Eyeing affordable housing application: Is PM Modi’s Housing For All dream achievable?

Published: February 19, 2018 4:32:37 PM

Affordable housing is making its way back into the real estate market in a big way, thanks to the initiatives taken by the Modi government.

affordable housing, affordable housing for all, modi government, Budget 2018, Pradhan Mantri Awas Yojana, PMAY, NHB, GST, RERA, real estate sectorThe Union Budget 2018-2019 has been the torch-bearer for all these reforms in the affordable housing sector.

Without any significant impedance in its way, the Modi government is very well on the way to realize its dream of ‘Housing for All by 2022’. Affordable housing is making its way back into the real estate market in a big way, thanks to the initiatives taken by the government, such as concentrating on the magnitude of beneficiaries associated with the ‘Pradhan Mantri Awas Yojana’, and assigning funds for infrastructure to this big fraction of the real estate market.

The government’s National Housing Fund looks to be streamlined via the National Housing Bank (NHB) as the de facto fund for priority sector lending and fully serviced bonds. The Union Budget 2018-2019 has been the torch-bearer for all these reforms in the affordable housing sector. The fiscal year has been forecast to witness a plethora of affordable housing projects come up, targeted at the Lower and Middle Income Groups (LIG & MIG). The GST for properties falling under the aegis of affordable housing projects has already been slashed from 12% to 8%.

The focus seems to have shifted from tightening up the loose ends in the larger real estate projects. These projects include the residential housing and luxury housing projects and the commercial real estate projects as well, all pertaining to the groups above the middle income groups.

Residential properties with a circle rate higher than 5% of the market rate of the same are going to benefited with no adjustment in capital gains tax computation. However, this will impact a very small portion of the market. The government seems to be very much intent on allowing the crème at the top of the real estate group to hold out on their own for at least the first couple of quarters of the coming fiscal year, if not beyond.

Given the few nagging leftover issues that are still dogging the affordable real estate micro market, it may behoove the government to iron out these creases as quickly as it can. Some of these challenges blocking the way to the next chapter in real estate are as follows:

# Rehearsing the stamp and excise duty on registering real estate properties.

# Preventing the inflation caused by the GST by revising the valuations.

# Bolster the RERA policies such that any delays caused due to State real estate laws impeding RERA are ruled out.

# Fan the digitization of real estate registries, insuring property titles and guaranteeing the same and enhancing liquidity of funds in the real estate market.

The renewed focus on housing will indeed have a positive impact on the real estate sector and there is no second thought that providing housing to as many as 2 crore people will take India far ahead both in terms of economic momentum and social welfare.

(By Honey Katiyal, Founder of Investors Clinic, a real estate consulting firm)

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