- Clarify beneficiaries under Pradhan Mantri Awas Yojana.
- Bigger income tax incentive for first-time home buyers.
- Infrastructure status to affordable housing.
- Provide higher tax saving on housing loan & home insurance premiums.
New Delhi: 2016 was a roller coaster year for the real estate sector. While much-awaited rules for the real estate regulator were finally notified in October, the demonetization exercise in November took the sheen away. By the year end, realty sector had already suffered a loss of Rs 22,000 Cr, as per Knight Frank.
As home sales remain low and new launches remain stagnant, the property market is now pinning its hope on budget 2017. Developers are expecting that the government will announce necessary sops and incentives to boost the real estate market.
“Real estate industry is looking at big bang initiatives to bring back consumption into real estate. We are not looking at minor tweaks of interest subvention but big bang ideas, big bang initiatives to bring consumption to real estate that could happen by a significant cut in income tax or corporate tax,” says Amit Oberoi, National Director, Colliers International.
Among others, the real estate sector is sticking to its longstanding demand of infrastructure status to housing, especially for the affordable and MIG section.
As CEO of DLF Rajiv Talwar puts it, the government must give “Infrastructure status for affordable housing. Finance Minister in the last budget made provisions for houses up to 600 sq ft. But it needs to be augmented for families and young couples. It should be at least 600 sq ft of carpet area.”
Mayur Shah, Director of Marathon Group concurs. “Government should give a big boost to affordable housing and for giving the boost, interest exemption limit should be increased to Rs 4 lakh. Affordable housing should be treated at par with infrastructure,” Shah says.
But there is a more important demand of giving impetus to disposable income, especially after note-ban. Developers are expecting that the government will kick-start consumer spending and further reduce housing and project interest rates in 2017.
“We have demanded that the government cap on interest subvention announced by Prime Minister be called off and rate of interest for housing loan be brought to 7%. Lowered interest will lead to better affordability,” Praveen Jain, President, NAREDCO says.
It’s the middle-income group that is expected to help real estate sector to regain its lost confidence. “Real estate of India lies in the middle segment and middle-income housing," says Akshay Diwani, Partner & Director at Assets Group. "I think that has lost focus. An interest rate drop is what every developer and buyers are looking at.”
But as any other industry, real estate players, too are looking for sweeping economic reforms.
“We want the government to make a big announcement. It should bring corporate tax reduction of at least 5%. Not 10% or 20% but alt east 5% in budget 2017” says Binay Agarwal, MD, Salarpuria Sattva.
But even as the wish list of real estate players is comprehensive, they are keenly looking out for clarity in taxation structure in the year to come. With work on GST still in progress, the sector is eager to be a part of the new regime.
Edited by: Saurabh Chakravertty