Single window clearance needed
Cutting down repo rates by 25 basis points, the RBI has made clear its intention to pave the way for a healthy economy. The new government, in its maiden budget, can provide some respite to the housing / construction sector by rationalising duties and levies on buying property.
The new government must also consider setting up a separate apex body which can govern the real estate sector. The Indian real estate sector is valued at close to $55-60 billion currently and expected to grow to $200-220 billion by 2020. There is a big need for an apex body which will address the issues faced by this money- and labour-intensive sector.
Access to funds at reduced costs for builders is one area which needs the government’s attention. Most banks and financial institutions do not encourage financing builders and even if they do it is at a high cost. Borrowing from other sources is an expensive proposition. Reducing the rate of interest on credit for builders will reduce the cost of construction, and in turn, bring down the cost of housing for the buyer.
Real estate supports many allied sectors such as iron, steel and cement. However, it is always at the receiving end when it comes to the costs of procuring these materials. Fluctuations in prices have severely affected the builder community in the past and in some cases had even led to builders stalling projects. The government needs to regulate prices of essential building materials.
A single window clearance system for builders is the need of the hour. Today, as many as 50 clearances are needed to start work on a project and these come from various government departments and local self-governments.
Ramesh Nambiar -Co-Founder, Nambiar Builders
Higher tax benefit
“We expect the government to boost the real estate sector by giving higher tax benefit to people. As of now, the relief on principal payment of home loan is part of Section 80 CC which is not enough, even though it was raised to 1.5 lakh in the last Budget. For a loan of Rs. 50 lakh the yearly principal payment works out to be roughly Rs. 2 lakh. Given that the person also invests in other saving instruments such as LIC, the limit for the home loan borrowers should be increased to Rs. 2.5 lakh.
Also, people who want to sell their house and move to a bigger house need to be incentivised. One way to do that is to announce a holiday on short-term capital gains tax for one year provided people sell their house and buy a new one within one year. This measure will ensure that need-based second time home buyers are moving to bigger houses, ensuring that there is ample supply at attractive prices for first-time home buyers."
Nimesh Bhandari, Co- Founder & CEO, Realtycompass.com
Affordable housing
*There is a strong need for the government to reconsider the decision to impose levies such as Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) in SEZs.
* Introduce uniform tax regime Direct Tax Code (DTC) and Goods and Services Tax (GST) and rationalise stamp duty across States so that there is a higher degree of standardisation.
*Income Tax deduction under Section 80-IB is currently allowed to developers to build affordable housing projects sanctioned on or before March 31, 2008. As this date has not been extended, the provision needs to be re-introduced in Parliament in order to generate interest of developers in Low Income Group (LIG) housing where demand exceeds supply substantially.
* Re-introduce the interest subvention for affordable housing, which was 1% on housing loans of up to Rs. 25 lakh, for houses that were valued at up to Rs. 40 lakh. This will have a positive impact on residential sales in small cities and towns and peripheral locations of metros where such units are available.
* Encourage rental housing and affordable housing projects; nhance supply-side factors especially in cities such as Mumbai and the Delhi National Capital Region (NCR). The necessary funding could be either provided through budgetary allocations or with the Credit Guarantee Trust Fund, setup by the Government last year, guaranteeing the loans taken for such projects.
* Enact provisions for Special Residential Zones (SRZs) to incentivise the growth of housing stock, especially in peripheral city limits and other targeted locations.
* Introduce incentives for the development of new smart cities.
* Provide tax incentives to boost retail investments in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs); specifically, exemption from DDT and capital gains on transfer of assets to REITs.
* Provide clarity on whether FDI is allowed in owning other built commercial asset classes such as shopping centres / malls.
Expectations are riding high that the Centre will continue to push for reforms that were so far left on the backburner and are much needed to revitalise the economy. As the Government has pointed out time and time again, revival of economic growth is its top agenda and the real estate sector will benefit immensely from this.
Sanjay Dutt, Cushman & Wakefield
