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Realty & expectations: What home buyers want
The Tribune  |  January 28, 2019

Vinod Behl

An interim budget in an election year might seem to be a time to have high expectations of populist measures, especially when it is about the real estate sector. Thus, home buyers as well as developers have tax benefits, better fiscal offers, thrust on infrastructure development and cheaper construction material on their wish list. However, even as optimism blurs reality, one can’t expect the FM to wield a magic wand to make things hunky dory for the beleaguered sector. Here’s a look at what the two important groups of stakeholders are looking for this year


Hoping that the government would offer poll sops, home buyers have pinned extra expectations on the budget. Here’s what’s on their wish list:


Tax breaks


Home buyers’ biggest expectation  from the 2019-20 budget is that the Finance Minister will take steps to increase their capacity to buy a home. One major way to achieve this is through tax incentives. Home buyers expect that the budget is likely to come  up with a proposal to considerably hike the present income tax limit of Rs 2.5 lakh to  at least Rs 4 lakh. The move may well bring more surplus money in the hands of home buyers, in turn increasing their  purchasing power.


In fact, home buyers are hoping for a double delight i.e besides income tax relief, they are expecting that under Section 24(b) of the Income Tax Act, the home loan interest deduction limit will be increased from Rs 2 lakh to Rs 3 lakh. As Anuj Puri, Chairman, Anarock Property Consultants, says, “In a poll year, the government should and, quite possibly, may offer tax benefits to home buyers”.


Softening of homeloan rates


Now that inflation is under control and oil prices may more or less remain weak, softening of home loan rates is also being expected. Prospective buyers would also like to see the budget offering some subsidy on home loans for  affordable housing.


Cheaper building material


A significant in tax rates on building materials that would rationalise the prices of cement, steel and other materials is also being expected. This will cut down construction cost to benefit home buyers.


Tax rationalisation


High transaction cost of residential real estate has been a constant concern for home buyers. A home buyer needs to pay 6-7 per cent on property cost as stamp duty, besides paying 12 per cent as GST on under-construction homes (8 per cent for affordable homes). So home buyers are looking at lowering of this high transaction cost through GST reduction.


NAREDCO, in its budget memorandum, has demanded GST @6 per cent, which after input tax credit, will become tax neutral for end-consumers.


CLSS Spruce up


Those looking for MIG houses are not able to take benefit of increased area norms by way of credit linked subsidy scheme ( extended by the government till March 2020) due to unaffordable property prices. They want the FM to make interest subsidy more attractive in the budget.


Tighten leash on timelines


Home affordability can also be  increased by controlling timelines and project completions. Home buyers want a three-pronged strategy on this front. Firstly, in line with government’s objective of ensuring ease-of-doing business, budget should create a mechanism to speed up project approvals and clearances.


Secondly, they want budget to announce incentivised policy to boost skilling of construction workforce and encouraging high technology to achieve scale of economy.


Then there is the all-important issue of stalled housing projects. The distressed home buyers whose hard-earned money is stuck inthese projects, are looking for relief by way of early completion of stalled projects.


RERA has done little to bail them out of this serious problem so far. And since the problem is largely due to developers facing fund shortage, home buyers are looking up to this year’s budget to unveiling some important policy measures like creation of sressed-asset fund to construct the incomplete housing projects. NAREDCO, too, wants the government to create such a mechanism with lending institutions to tide over the problem.


New impetus to affordable housing


Home buyers are looking for favourable measures that would enable them to avail of the benefits of infrastructure status granted to affordable housing. Echoing the sentiment of home buyers in this regard, Pradeep Aggarwal,


Chairman, Assocham’s National Council of Affordable Housing, calls for an effective implementation of infra status to affordable housing, with banks allocating a certain fixed portion of funds for construction finance at reasonable rates. This will help bring down the cost of construction, making homes more affordable.