The Budget session of 2016 will be extremely critical. Sluggish demand has meant that 1,80,000 apartments remain unsold in Delhi NCR followed by Bengaluru (with 94,000 apartments) and Mumbai (80,000); many homebuyers are paying a heavy price for projects being delayed for one reason or the other. Delay in approvals and a massive debt obligation (amounting to Rs 30,000 crore in case of top 25 developers) has also made the going tough for builders.
Most realtors and experts are hoping that the real estate regulatory bill will finally see the light of day this year as more people will get the confidence to buy residential property, something they have been putting off over the years. Other expectations include granting infrastructure status to the sector, single window clearance, tax reforms and introduction of special residential zones (SRZs).
Discussions on the real estate bill must reach a positive conclusion, which will give homebuyers the confidence to return to the market and deal with responsible builders, says David Walker, managing director, SARE Homes.
“We are pinning all our hopes on the upcoming union Budget 2016. Getting infrastructure status has been a long pending demand of the real estate sector and this time too we hope that we will be given infrastructure status so that developers can avail finances at cheaper rates from financial institutions. We are also eagerly waiting for the introduction of a single-window clearance system so that approvals are received on time and timelines met,” says Manoj Gaur, president, Credai NCR and MD, Gaursons India Ltd.
Infrastructure status to the sector will help achieve the government’s vision of Housing for All by 2022. Also, affordable housing loans should be provided for acquiring land and external commercial borrowings (ECB) must be permitted for the housing sector, says Nitesh Kumar, COO TDI Infracorp Ltd.
The National Real Estate Development Council (NAREDCO) has demanded creation of Special Residential Zones (SRZs) for affordable housing on the lines of Special Economic Zones (SEZs) where special concessions and incentives can be given along with single window clearances.
Parveen Jain, president, NAREDCO, has, in a pre-budget memorandum to the government, requested that it should consider increasing the deduction under section 24(b) of IT Act 1961 to Rs 3 lakh from the current level of Rs 2 lakh of interest paid on home loan on a self-occupied house. Priority sector lending needs to be extended for home loans of up to Rs 25 lakh for rural, small and medium cities, Rs 35 lakh for metropolitan cities and Rs 50 lakh for mega cities. Also, income from renting of properties should be taxed at a flat rate of 10%, .
As far as tax reforms are concerned, the Budget should offer financial protection from project delays to homebuyers. As of now, on purchase into an under-construction property, buyers can only claim tax benefits of Rs 2 lakh after possession if construction is completed within three years. The benefits reduce to Rs 30,000 if the builder delays construction beyond this - and they pay higher interest. First-time home buyers purchasing properties for self-use additionally pay rent.
“Instead of allowing homebuyers tax benefits after possession, the Union Budget should make a provision that allows the benefits from the time they start paying interest on housing loans. This will ease their monetary burden considerably and increase the velocity of home loan disbursements. Similarly, if an under-construction property is purchased from capital gains, its construction must be completed within three years of its sale to avail exemption. There can be delays by developers in such cases too. These deductions should be brought at par and the construction timeline should be extended from the current three years to five years,” says Anuj Puri, chairman and country head, JLL India.
Follow @htestates1 on Twitter
Connect with us on www.facebook.com/htestates