In search of housing for all

Emerging from a prolonged slowdown, the real estate sector is hopeful of policies that will aid its speedy recovery. By Shrinivas Rao

The key takeaways of Budget 2015-16 for the real estate sector were the big moves on infrastructure development, a definitive timeline for the introduction of GST, a progressive reduction of corporate tax rates to 25% and the amended taxation framework for Real Estate Investment Trusts (REITs).

As the real estate sector gradually emerges from a prolonged slowdown, it is hopeful of individual and industrial policies that will aid its speedy recovery.

The major steps to achieve housing for all by 2022 are as follows:

· Make provision for infrastructure development on the outskirts of metros

While the last budget prioritised affordable housing, there was no mention of connectivity to the remote peripheries of a city where these large-scale housing projects were being developed.

These areas lack both social and physical infrastructure and viable commuting facilities.

The Union Budget 2016-17 should allocate funds or allow easy financing options to the developers planning projects in this residential category.

· Make use of healthy tax saving on housing loans and encourage property insurance premiums

Tax benefits on principal repayment and interest repayment on home loans allow high tax deductions.

Given the high property prices in metropolitan cities like Mumbai, Bengaluru etc., the government should pay heed to scaling up the tax deduction limit on housing loans. Further, the tax exemption limit should be increased and the tax benefits on schemes encouraging end user to insure their homes could be focussed on.

· Offer financial protection from project delays to home buyers

Since the last budget, there is a marked increase in budget and mid-segment-large scale projects across cities. However, these projects require at least 3/5 years for completion and the end users are sensitive to pricing and in case of delayed timelines, they are liable to account for rent as well as EMIs. The Union Budget 2016-17 ought to facilitate monetary benefits on housing loan from the start date instead of allowing tax benefits post-possession to first-time home buyers. This will hike the velocity of home loan disbursements. Moreover, if an under-construction property is purchased from capital gains, its construction must be completed within three years of its sale to avail exemption.

These deductions should be brought at par and the construction timeline should be extended from the c urrent three years to five years.