January 26, 2023
Low Interest Rates Will Create High Realty Interest
The capping of Rs 45 lakh applicable for an affordable house should be extended to 60 lakhs, says NAVIN MAKHIJA, Managing Director – The Wadhwa Group
The Government has shown adequate support by bringing in reforms in policies and announced some slew of relief measures to revive the economy in the past two years of pandemic.
A lot more is expected from the upcoming budget that will give a further boost to accelerate the economy from where we are today and we strongly believe that the Government will take appropriate and necessary measures to spur consumer demand.
Since with the inflation and the loan interest rates are moving upwards, more tax sops and higher relief on the home loan rates will woo the homebuyers and investors to buy Real Estate. Irrespective of whether it is the first home or the second home, without an upper cap all the interests that the customer pays for the home loan should get a tax break.
This will encourage the home buyers and investors to continue looking at Real Estate as an asset class and in return infuse liquidity into the Real Estate sector and also help banks who were sitting on excessive liquidity to utilize their money in the right direction. Also, the income tax benefit for housing should not only be for residential purchasers alone rather it should also be extended towards commercial purchasers as well.
This can help the sector recover from its liquidity woes to a large extent. We would also like the government to revive the input tax credit under the GST reforms which will help to keep the property prices under control instead of developers generally passes it on to a buyer.
The capping of Rs 45 lakh applicable for an affordable house should be extended to 60 lakhs. This would expand the benefits of affordable housing schemes to more home buyers and therefore boost the end-user demand. While incentives have been provided to boost the affordable housing segment, there needs to be a reduction in the cost of land, development premiums and tax, sops including lower intra rate to incentivize developers to build budget homes. Since the high cost of land is another major constraint faced by the sector, steps taken by the government to unlock the value of land parcels held by government agencies / PSUs through partnerships with affordable housing developers can be a significant step. Such initiatives can also help the government to improve its revenue generation capability. The Government also needs to allocate more funds for Pradhan Mantri Awas Yojana (PMAY) which will help them achieve the target of ‘Housing for All’.
Industry status for the sector and single window clearance for projects has been a long-standing demand which we expect the Government to address. Apart from this, we are expecting a more determined infrastructure push from the Government not only in the form of more funds but with strict guidelines on actual infra deployment. This will certainly boost the real estate sector and also generate more jobs that the Government has committed to deploy.
We anticipate the Government to announce incentives that will propel the growth of the sector such as introducing tax breaks which will increase public spending, less transaction cost, etc.