Budget 2017 wish list: should ‘priority’ housing be redefined?
To achieve the target of two crore housing for all by 2020, the government must provide infrastructure status to low cost housing to facilitate easy access to institutional finance and redefine priority housing to include first-timers aspiring to buy property in cities, say real estate experts.
On December 31, 2016, Prime Minister Narendra Modi announced an additional subsidy on home loan interest rates, saying that the government will facilitate 4% and 3% interest rate rebate for housing loans of up to ` 9 lakh and ` 12 lakh, respectively. The real estate sector is hoping that tempo will be maintained in the upcoming Budget and the government will consider granting infrastructure status to low-cost housing to provide an impetus to a sector suffering from the impact of demonetisation.
A key expectation f rom Budget 2017 is to have recognition for affordable housing as infrastructure since that would provide access to institutional finance, says Getamber Anand, president – Credai National.
To ensure that the sector achieves the target of delivering two crore houses by 2020, the government should announce measures to assist developers work towards that goal, says Deepak Kapoor, president, Credai Western UP. “As of now the affordable housing target is far behind and it can only be achieved if the sector gets accorded infrastructure status which would pave way for cheaper financial options for real estate developers,” says Prashant Tiwari, chairman, Prateek Group.
The government also needs to redefine priority housing. While it has defined the sizes – 30 sq m for the metropolitan cities and 60 sq m for urban markets – these units are mostly targeted at the lower income group. This needs to be expanded to meet the expectations of the urban middle class, especially those aspiring to buy for the first time homes in metro cities, say real estate experts.
“The ticket size of homes in urban centres is higher and cost more than ` 20 lakh to ` 50 lakh. Given the high cost of land, labour, material and cost of operations, developers can offer houses that are in the range of ` 80 lakh to ` 1.5 crore in these cities.
“The government must redefine priority housing to include houses that cost up to ` 1.5 crore and extend the benefits to first home buyers for homes of up to the aforementioned costs. Developers of such projects should also benefit from the government financing and other tax initiatives that are extended for housing development,” says Anshul Jain, managing director, India, Cushman & Wakefield.
Experts argue that since banks are flush with funds after the note ban, interest rate benefits should be passed on to consumers.
Realty stakeholders hope that the government will provide high tax incentives on home loans to boost demand for housing.