Real Estate pins hope on Budget 2021
Realtors feel that encouragement has to be given to the buyers, who have realized the importance of owning a real estate asset
As the nation is getting ready for the Budget 2021-22, the real estate sector is looking anxiously at the announcements to be made that can help the sector come out of last year’s deficit. Experts are unanimous in the view that the Budget would be about growth and recovery; the Government is likely to take some strict measures to ensure that the economy returns on the recovery path. Being the largest employer in the country and a contributor in the GDP, the real estate hopes to get some benefit from the announcements.
The sector is basically divided into luxury, affordable, and mid-segment; each of these segments has its own set of expectations that needs to be addressed; the crux of demand from developers is almost same as all of them are demanding better streamlining of the sector through various measures and improvement in liquidity. Tier-II and Tier-III cities are also emerging as the realty hotbeds, which calls for proactive government intervention to see the realization of growth targets. “As we are going through the challenging times, we expect that FM’s Budget will truly be one-of-its-kind for the real estate sector too. It will be a tough call for the FM as she has to balance the market needs and financial prudence. We hope that the Government will focus on improving infrastructure in tier II and III cities, employment generation in cities beyond metros, and fund allocation for the stuck projects,” says Nagaraju Routhu, CEO, Hero Realty.
Sikka Group’s Managing Director, Harvinder Singh Sikka, says, “Although, support to the sector was extended by RBI with low home loan interest rates and restructuring of loans, there remains a large gap to be filled for bringing about the lost momentum in the sector. As customer inquiries and buyers’ interest in property investment begins to rise, the price of raw materials needs to be addressed under this Budget. Realty is further associated with multiple ancillaries; any relaxation provided to this sector will ultimately benefit a great number of associated stakeholders.”
The affordable segment is dependent on the financial health of the common man, and hence the realtors expect that the common man will get some respite that could streamline their funds. The expectation is that the buyers will get loans at affordable rates and the moratorium on loan payments. Voicing the needs of the developers in the affordable segment, Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development, says, “Income Tax holiday for Developers in Affordable Housing was given for 2020. After struggling with the pandemic situation for the entire year, it would be encouraging for developers to get this rebate for another 2 years; banks should provide Project based (land & construction) funds at 6%; for first time homebuyers (in Affordable Housing) stamp duty exempt is required pan India; technology import (like aluminum shuttering used in AFW) for construction of affordable housing from other countries should be free from custom duty; stamp duty for land purchase in affordable housing should be reduced or removed for next few years to promote the launch of such homes; and GST on material and services used in affordable housing should be reduced to 50% or brought to single digit”.
Putting forward his point, Dhiraj Bora, Head - Marcomm, Paramount Group, says, “An aspect that can be looked into is the accountability of authorities, they must be analyzed by RERA since delays in granting permissions impact the delivery timelines of projects, which further brings liquidity crunch for developers and negative sentiment among the buyers. The reduction in real estate premiums and stamp duty for Maharashtra region has brought a windfall of sales there, now the NCR market having the widest variety in the residential segment awaits similar policy measures to be announced”.
It is expected that the Government will take last year’s thought and action forward to come up with the announcements that can be implemented in the short term. “Real estate sector needs the support of the Government wants every Indian to have a house. Escalating costs and delays are the biggest hurdles; Government must step in through income tax incentives to the developers, rightly priced land, availability of land in major cities for affordable housing, and so on. The list of expectations is endless because the goal is large – to provide houses to everyone in the Budget that they can afford and still not compromise on the amenities or the deadlines given to the buyers,” says Achal Raina, COO, Raheja Developers.
Realtors feel that encouragement has to be given to the buyers, who have realized the importance of owning a real estate asset. Dhiraj Jain, Director, Mahagun Group, says, “Currently, the deduction for principal repayment of housing loan is Rs 1,50,000, and the deduction is clubbed with other tax saving instruments. We hope that the Government will increase the deduction under section 80C for principal repayment of housing loan from the existing limit of Rs 1,50,000; this will encourage the home buyers to expedite their buying decision.”