- ‘Infrastructure’ status to Affordable Housing
- Allocation of Rs 23,000 Crore Pradhan Mantri Awas Yojana up from Rs 15,000 Cr
- Tax relief on unsold stock for a period of up to one year
- Holding period for capital gains tax reduced to 2 years from 3 years
Budget 2017 brought cheers to the real estate sector which has been reeling under losses since demonetization. Among a plethora of provision for housing, the budget also attended to the long-standing demand of “infrastructure” status to affordable housing.
The budget 2017 is expected to be a game changer for the real estate sector.
“The budget has significantly enhanced the likelihood of realizing the goal of PMAY by 2022. Granting the long-standing demand of infrastructure is a major supply side intervention,” says Venkaiah Naidu, Minister of Housing and Urban Development.
One of the key provisions of the budget that would shape the real estate sector going forward is ‘Infrastructure’ status to Affordable Housing.
“Infrastructure status to the affordable housing segment would enhance resource allocation for the sector by way of cheaper foreign funds and will be a priority lending for banks as well,” says Sunil Mishra, Chief Strategy Officer, PropTiger.com.
NAREDCO President, Praveen Jain adds, “The aim of building 2 Cr houses will now fulfill. The rate of interest for developers will go down and tax benefits will be extended to them.”As a result, real estate prices could come down in the year ahead.
In an exclusive conversation with NDTV, Managing Director & CEO of National Housing Bank, Sriram Kalyanaraman asserts, "Expect low cost of fund to translate into low cost of housing."
Other key announcements in the budget include the allocation of Rs 23,000 crore under Pradhan Mantri Awas Yojana and tax relief on unsold stock for a period of up to one year, also the holding period for capital gains tax to be reduced to 2 years.
“The change in the capital gains tax from the beginning to the end of a project with respect to Joint Development Agreements will prove to be an important impetus to such projects by reducing the cost of land to the developer" says Ravi Ramu, CEO & MD, VBHC.
As cash inflow increases, one could witness homes getting cheaper and spacious in the years to come. This coupled with an interest subvention announced by the Prime Minister will boost buyers prospect of securing a home.
Rajeev Talwar, CEO, DLF reiterates, “A large provisions now will definitely mean that Housing For All will take off, it will be a big game changer in the economy.”
Even though buyers were expecting a rate cut and were in for a disappointment, most agree the budget 2017 will empower them to bargain harder.
“On incentives part, not much has come up from budget, but at least now home buyers can sit with developers and ask them for a discount on pricing. Bargaining power now lies with the consumer,” says Rizwan Riaz, a home Buyer from Chennai.
Summing up the budget 2017, Ashwinder Raj Singh, CEO – Residential Services, JLL India says, “Tax breaks and other sops will help builders cut their cost, improve their bottom-lines and get additional liquidity to improve efficiency. These steps, along with other impending regulatory breakthroughs such as RERA and GST will not only fuel demand but make the sector more efficient and organized.”
So while the overall reaction to the Budget 2017 has been positive and is expected to cushion the impact of demonetization, it is the GST roll out this year that could bring further clarity in the Indian property market.