With affordable housing in Gurgaon becoming out of bounds, scores of homebuyers and realtors are hoping that Friday’s Union Budget will offer some relief.
They are pitching hope on finance minister Pranab Mukherjee to announce a policy that will benefit low-cost housing projects. While there is ample availability of housing in the mid and high segment range, affordable homes (up to 1,000 square foot area) are hardly available, thanks to policy as well as practical constraints for builders.
In the run-up to the budget, the National Real Estate Development Council (NAREDCO) recently called on the government to reintroduce 100% deduction of profits derived from construction of smaller housing projects (300-1,200 sq ft built up area) under Section 80-IB(10) of the IT Act 1961 that was scrapped by the Finance Act, 2009.
While this benefit was applicable up to 1,200 square foot built-up area in Mumbai and Delhi, at other places it was up to 1,500 square foot.
The entry-level cost of a 2-BHK flat in Gurgaon, according to realty experts, is Rs40-50 lakh and the prices are rising by the day. Escalating prices ensures that junior and mid-level executives earning in the range of Rs15,000-Rs40,000 per month are left untouched by the benefits of mushrooming housing projects in Gurgaon.
“I will be happy if developers construct small houses. I hope this year's budget encourages them to do so,” said Binod Kumar, a banking executive who moved to the city in 2005 and has been striving to book his dream flat since then.
Dharmendra Bhandari, CMD, Bestech Group said, “If the government announces reduction in the cost of steel and cement, we can cope with the 15% annual hike in construction cost better and think of investing in smaller projects that are within the reach of the middle-class.”
Samarjit Singh, MD, India Homes, points out that “unless there is a major policy fillip for the developers, they won’t invest in affordable housing projects as it reduces their profitability since they have to construct more common space, bathrooms and balconies”.