Bringing back the buyer

HOME RUN Bringing home buyer back to housing sector is the new focus for both the government and realty players

CHANDIGARH: The worst is over for the housing sector, though, a full market revival will slow to come around. With major policy decisions like demonetisation, real estate regulator, new indirect tax regime, crackdown on benami property in the process of being absorbed by the sector, both the private and public sector initiatives are now focusing on bringing the home buyer back to the market.

The effort is to transform the large untapped potential demand into actual demand.

PURSUINGALT-MODEL

The realty slow down and the real estate regulatory act initiated the consolidation in the housing sector. The space for the fly-by-night builders is fast getting constricted and this has allowed the consolidation in the sector with only serious left to pursue the home buyer.

The stagnant demand is also pushing the more serious builders to pursue an alternative model for attracting buyers. Builders are creating new verticals like for affordable housing and green buildings.

“We have created a new vertical which will focus on providing only green buildings for the home buyer. In the first launch, under the vertical we launched this week a multi-storey project in Zirakpur on the Zirakpur-Patiala national highway. In our experience, even during the period of severe slow down, there was buyer for quality products. In this project also, the buyer response is very positive. Builders who offer different and credible products will always have the end-user demand. The key is to increase buyer awareness about the new products, which are both financially and economically friendly,” says Amit Mittal, a Zirakpur-based builder.

Similarly, builders who recently launched projects focusing on affordable and budget housing report success in bringing back buyers.

CENTRE’SPOSITIVE INTERVENTION

This week, the Union cabinet approved increasing the carpet area in the MIG (middle income group) categories of the credit linked subsidy scheme (CLSS).

The government increased the carpet area in the MI G-I category from existing 90 sq m to up to 120 sq m, and increased carpet area for MIG-II category from the existing 110 sq m to up to 150 sq m.

Under the MIG-I category, a 4% interest subsidy is provided to the beneficiaries with an annual incomeofRs6-12lakhonaloanof up to Rs 9 lakh. Under the MIG-II category, the beneficiaries with an annual income of Rs 12-18 lakh get a 3% interest subsidy on a loan of up to Rs 12 lakh.

The Union government have also revised the House Building Advance( H BA) rules for central government employees incorporating the accepted recommendations of the 7 th Pay Commission. The total amount of advance that a central government employee can borrow from government has been revised upwards.

The employee can up to borrow 34 months of the basic pay subject to a maximum of Rs. 25 lakhs, or cost of the house/flat, or the amount according to repaying capacity, whichever is the least for new construction/ purchase of newhouse/flat. Earlier this limit was only Rs.7.50 lakhs.

Similarly, the H BA amount for expansion of the house has been revised to a maximum of Rs 10 lakhs or 34 months of basic pay or cost of the expansion of the house or amount according to re paying capacity, whichever is least.

This amount was earlier Rs 1.80 lakhs. Further, both spouses, if they are central government employees, are now eligible to take HBA either jointly, or separately.

Earlier, only one spouse was eligible for it. The clause of adding a higher rate of interest at 2.5% above the prescribed rate during sanction of HBA stands withdrawn.

Earlier the employee was sanctioned an advance at an interest rate of 2.5% above the scheduled rates with the stipulation that if conditions attached to the sanction including those relating to the recovery of amount are fulfilled completely, to the satisfaction of the competent authority, a rebate of interest to the extent of 2.5% was allowed.

The revised conditions are expected to incentivise the government employee to buy house by taking the revised H BA along with other bank loans, if required. This will give a fillip to housing infrastructure sector, say realty experts.

“By this decision of the government, homes up to Rs 1.25 crores will come within the reach of the government employees and will cover demand in almost all towns and cities, all over the country. It will, therefore, be the key to start numerous new housing construction projects,” says, Rajeev Talwar, chairman, NAREDCO (national real estate development council).

These steps are expected to bring back the buyer to the housing market. The end-user and the need-based investor will be encouraged to increased their participation in the market, though, the sentiment is still to become very encouraging for the short-term investor.