The Union Budget – 2017 is out and it has brought more than a sense of relief for the real estate sector. Real Estate is the second biggest employment generator after agriculture, contributing approximately 5-6% of the country’s Gross Domestic Product (GDP).
Affordable housing, which had been neglected for a very long time, has been given great importance in the budget. This will not only help push up the sales of houses under this segment but will also give a strong impetus to real estate as a whole.
Let’s look at some of the major highlights of the budget that will directly impact the real estate industry.
- In a dramatic move, affordable housing has been granted ‘infrastructure’ status. This means that it will become easier for developers to access institutional credit and will also help in reducing developers’ cost of borrowing for affordable projects. The approval process will be further simplified. Clearer guidelines will help improve transparency and enhance credibility.
- Fund allocation to the Pradhan Mantri Awas Yojana (PMAY) has been increased from 15,000 crore to 23,000 crore.
- The definition of Affordable housing has also been tweaked in terms of the area. Previously, flats of upto 30 square ‘meter’ ‘built-up’ area in four metro cities and up to 60 sq.mt. in other cities would fall under this scheme. Now, flats of 30 square meter ‘carpet area’ within the municipal corporation limits of four metro cities, and 60 sq.mt. beyond the boundaries of the four metros, fall under this scheme.
- The time limit for construction has been increased from 3 years to 5 years.
- The loan tenure for Credit Linked Subsidy Scheme (CLSS) has been increased from 15 years to 20 years. This will considerably bring down the EMI rates, thus giving a boost to affordability.
- The demand for flats under the Affordable Housing category has been the highest. In order to meet the demands, the government has a target of building 1 crore houses for the homeless and those living in ‘kachcha’ houses, by 2019.
- Rs. 3,96,135 crore has been granted for infrastructure, with Rs. 64,000 crore given to the development of National Highways. This will help improve connectivity, which will consequently raise the demand for projects on the outskirts.
The budget has brought a lot of good benefits for the realty sector. It focuses on adding to the long-term and sustainable growth of the economy. With the decisions passed, the realty industry is all set to witness a boom!