Housing for All by 2022 : A Dream hurtling towards Reality?
The Union Budget 2017 looks set to have a fairly dramatic impact on the housing sector. Giving a major boost to the ‘Housing For All by 2022’ campaign, the Union Budget 2017 released by Finance Minister Arun Jaitley, bestowed the budget housing sector with ‘infrastructure status’. The announcement is bound to boost investment by private players. The involvement of private players will in turn lead to competition, which would then end up providing more options for the middle and lower-middle classes aiming to buy their first homes.
The real estate sector contributes approximately 15 per cent of India’s GDP; yet it still doesn’t have an official industry status. Experts have consistently been asking the government to grant it ‘industry status’. Since the real estate sector is not included among the categories of industry, developers, builders and investors are often compelled to avail loans at higher rate of interests. Due to the high interest rate on loans, builders always face a shortage of funds. The end result? Delayed completion of projects, and irate consumers.
Regarding the Pradhan Mantri Awas Yojana (PMAY), the government announced that an interest rate of only 4 per cent would be charged on loans above Rs. 9 lakh, and 3 per cent on loans above Rs. 12 lakh.
Help for builders with homebuyers in mind
Other highlights from the Budget that are likely to impact the real estate sector:
- 1 crore houses will be created in the rural areas by 2019.
- The National Housing Bank will refinance Rs. 20,000 crore worth of loans.
- The Pradhan Mantri Awas Yojana will be allotted Rs 23,000 crore.
- Real Estate Developers will get tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed.
- Taxes will be levied on Carpet area of 30 and 60 square meters instead of Built Up Area of 30 and 60 square meters.
- The holding period for capital gains tax for immovable property is being reduced from 3 years to 2 years
- Builders will get a tax break of 1-year post receipt of the completion certificate, for unsold stock.
- No cash transaction above Rs 3 lakh will be allowed.
- Rs 2.41 lakh crore is being allocated for boosting transportation infrastructure.