Union Budget is not all good news for young homebuyers: experts
Renting may be easier. Paperwork simpler. But taxes and land reforms are still stuck in the past.Updated: Jul 29, 2019 13:41 IST
The budget is futuristic, caters to Gen-Y and takes a step towards unclogging some of the procedural issues holding back the real-estate sector, stakeholders feel.
“Reforms spoken of, such as the creation of robust water management systems and investing Rs 100 lakh crore in infrastructure development, will help create livable cities and encourage people to invest in the peripheral areas too,” says Dhruv Agarwala, group CEO for real-estate portals Housing, PropTiger, Makaan and Fastfox. “Other measures such as aiming to create world-class educational institutions will bring students from around the world to India and help boost the student housing asset class.”
Finance minister Nirmala Sitharaman also announced 17 model sites across the country that will be turned into tourist destinations. “The government announced that it will improve the connectivity to the sites, brand them well and provide facilities,” says Vinod Rohira, MD and CEO for commercial real-estate and REITS at K Raheja Corp developers. “This will lead to demand for construction, help generate employment and in other ways directly and indirectly boost the real-estate sector in these places.”
In initiatives that will directly impact the field, the Budget has proposed a new model tenancy law for rental housing, and an income tax waiver on an additional Rs 1.5 lakh paid in interest on home loans in the affordable housing segment. “Laying down a roadmap for rental housing was much needed, especially in the time where the world is embracing the trend of co-living,” says Bhairav Dalal, partner and leader for real-estate tax at advisory firm PwC India. “Our rental laws were archaic. The reform will benefit tenants and owners alike and make the rental homes segment a lot more transparent.”
Given that many potential buyers have turned fence-sitters, the additional tax deduction on home loans will be a considerable additional inducement. “Many of the realty- and infrastructure-related initiatives listed in the budget are in line with the government’s mission of Housing for All by 2020,” says Niranjan Hiranandani, president of the National Real Estate Development Council or Naredco, a regulatory body for builders.
What also looks like a good move is the interchangeability of Aadhar and PAN cards during real-estate transactions; it offers flexibility to buyers, adds Tushad Dubash, director of Duville Estates developers.
The budget has allowed foreign portfolio investors (FPIs) to subscribe to Real-Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InViTs). “This will help broaden the investment options for foreign investors and spur inflows in real-estate,” says Ramesh Nair, CEO and country head for JLL India.
Major concerns remain. “The all-important industry status that we’ve been waiting for, for years, remains elusive,” says Anuj Puri, chairman at Anarock Property Consultants. “Taxes are not sufficiently moderated and land reforms were not mentioned at all.”
First Published: Jul 13, 2019 17:28 IST