Budget 2023 expectations: The housing sector did well in 2022. As per the reports by Anarock Research, residential property sales in 2022 increased by over 50% compared to 2021. However, everything is not as smooth as it appears for the housing sector in India as we look at 2023 and beyond. This is where Budget 2023 can step in to provide a significant boost to the sector, both from the buyers’ and sellers’ side, experts say.
“The home loan/real estate sector is an important part of the Indian economy and is facing some challenging times due to the rising interest rates. To foster growth in the sector, lenders need to offer competitive loan products with sensible pricing and attractive repayment terms. This can help the sector stay competitive and provide budget certainty to the customers,” says Atul Monga, Founder and CEO of BASIC Home Loan.
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Following are the top 5 ways in which Budget 2023 can help homebuyers, according to real estate industry experts.
Home Loan Rules Change
Anuj Sharma, Chief Operating Officer of IMGC says there is a need to lower interest rates on home loans to make home loans affordable. While loan rates depend on RBI’s policy rates, Budget can provide relief to homebuyers by relaxing the rules for availing home loans.
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“This could include measures such as reducing the required down payment or easing eligibility criteria for home loans, which could make it easier for home buyers to secure financing,” says Sharma.
Tax Rebate Amid Rising Rates
Experts say that increasing interest rates are expected to have a major impact on home loan and real estate sectors. Rising rates will make affordability a major concern for buyers going forward. Therefore, the government needs to take steps such as hiking the tax rebate on housing loan interest under Section 24 (b) to Rs 5 lakh.
Sharma says that tax exemptions or deductions for first-time home buyers can help reduce the overall cost of purchasing a home, making it more affordable for first-time buyers.
Change in Affordable Housing Limit
According to Monga, the current price band of Rs 45 lakh for a property to be considered under affordable housing is not appropriate in most of the cities in India, it should be increased to Rs 75 lakh or more.
Experts say that the current GST structure for under-construction and affordable housing creates an additional burden on developers, leading to a higher cost of properties for buyers. This leads to a higher price of a house because the GST on steel and cement is 18% and 28%, respectively and developers cannot claim tax credits for GST paid on input items. To reduce this burden and increase the affordability of properties, the government can consider restoring Input Tax Credit (ITC) in the upcoming Budget.
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Also, capping GST at 1% for under-construction projects and reducing raw material costs such as cement and steel can help encourage more people to buy affordable homes.
Anil Pharande, Chairman of Pharande Spaces and President of CREDAI Pune-Metro, says the rental housing market in India is still relatively underdeveloped. Budget 2023 could take steps to encourage the growth of this sector by including measures such as providing tax incentives for developers who build rental housing projects.