January 19, 2018

The year 2018 is full of expectations from the upcoming budget as homebuyers are looking forward to buying homes and developers are keen to sell. Tax benefits are likely to help many people buy their first homes, fulfilling the government’s objective of ‘Housing for All’. Many are hoping that reduction in taxes and incentives will significantly push the real estate sector.

Let us find what the industry and buyers expect from this year’s budget.

Buyers are looking for:

1. Cheaper Home Loans: Lower rate of interest is already being offered by banks but buyers expect more. The rate of interest on housing loans needs a further reduction to increase buying. The credit-linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (Urban) has significantly helped the middle-income group. “Benefits section 80C for home loan repayments should be increased from Rs 1.5 to 5 lakh. Incentives and lower interest rates reduce the burden of EMIs on the salaried class and gives them confidence to buy a house,” says Nikhil Kain, a homebuyer in Delhi.

2. Exemption and Incentives: Buyers expect an increase in incentives for first time home buyers under section 80EE by way of increasing the limit from Rs 50,000 to Rs 2 lakh. This can really help young homebuyers who want to own a home but are not able to do so because of financial restraints.

3. Reduction in tax slab: Budget 2018 is expected to increase the personal income tax limit as the lower income group falls in this category. It is one of the most important categories in the affordable housing segment so tax benefits will be helpful for homebuyers in this segment. Tax exemption is expect to be raised from Rs 2.5 to 3 Lakh in this budget.

Developers are looking for:

1. Industry Status for the Real Estate Sector: “The Real Estate Sector should be allotted ‘Infrastructure’ status. This will lead to construction funds being available to the developer at much lower interest rates. This is eventually going to benefit customers from the Economically Weaker Section (EWS) and Lower Income Group (LIG) as developers would be in a position of making the projects ‘affordable’ in its true sense,” says Rohit Poddar, Managing Director, Poddar Housing and Development Ltd.

2. Infrastructure Status to the Housing Sector: Giving Infrastructure status to the Housing Sector is expected to simplify the approval process for affordable projects, create guidelines and increase transparency. It could also attract debt and pension funds to invest in the affordable housing segment.

3. Single window clearance: One of the main reasons for delay in projects is the approval process. A single window clearance will not only help developers kick off their projects at the earliest but buyers are also likely to get possession without any delay.

This has been a long pending demand of the industry. “The biggest delays in delivery of houses occur due to delay in approvals of projects and authorities have a major role to play in this. An online single window clearance with bare minimum human interface and precise deadlines for approvals will not only bring down the deliveries of the project by at least three years but also reduce the cost of the project by at least 15% which can further be passed on to the consumers. Going online will also boost transparency,” says Amit Modi, Director, ABA Corp and Vice President, CREDAI Western UP.

This year, the budget is expected to be different as now the GST Council decides tax rates for goods and services. But buyers and developers are looking forward to tax relief and incentives to boost the real estate sector.

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Source: realty.economictimes.indiatimes.com