How Budget 2018 may impact markets, buyers
Despite no major boost, announcements such as the tax on long-term capital gains and allocation for urban projects may have an indirect impact on real-estate.Updated: Feb 10, 2018 17:11 IST
As union finance minister Arun Jaitley presented the Budget last week, the real estate industry waited in anticipation. “Single-window clearance for all new projects, greater tax benefit for buyers on home loans, a cut in GST rates and industry status for the sector were some of the systemic changes awaited. The budget was too cautious at a time when major policy reforms were needed,” says Santhosh Kumar, vice-chairman of Anarock property consultants. “We also anticipated regularisation of stamp duty and registration charges across the country,” adds Shubhika Bhilka, business head of the Real Estate Management Institute (REMI).
The only major announcement, though, was the creation of the Affordable Housing Bank under the National Housing Bank, the central finance institute for housing in India.
“This will give a boost to the mission of housing for all by 2022,” says Dhaval Monani, founder of First Home Realty Solutions, a Gujarat-based developer. “It will create funds for the Credit-Linked Subsidy Scheme, under which the government provides financial support, through partial interest payment, for home loans up to Rs 6 lakh.” Indirectly, this could the real-estate segment.
All the benefits set to accrue to developers and buyers from the budget, in fact, are of an indirect nature.
The imposition of long-term capital gains tax on equity, for instance, could prompt investors to pick realty instead.
“Equity markets tend to be favoured by investors in general,” says Mudassir Zaidi, executive director of property consultancy Knight Frank India. “Since there is now a 10% tax on gains over Rs 1 lakh on equity investments held for over a year, this may direct investment to other assets, including real-estate.”
The budget also allocated funds for smart cities (Rs 2.4 lakh crore) and urban rejuvenation (Rs 1,019 crore), and the implementation of the revamp plans could boost realty markets in those areas too.
“Our cities are grappling with basic problems such as a lack of potable water, congested roads, outdated sanitation and diminishing green cover. These problems need immediate attention, and the urban allocation fund could be used to improve the quality of life in some of our cities,” says Kumar of Anarock.
As for the long-held expectation of industry status and single-window clearances, there is still hope, industry analysts say. “We are optimistic that the government will look into the unaddressed concerns,” says E Jayashree Kurup, head of content and advisory at online property portal Magicbricks.