Indian real estate brands and companies are hopeful about Union Finance Minister Nirmala Sitharaman considering some of their longstanding demands with regard to revisions in the affordable housing definition, higher deduction limits for home loans, and industry status for the realty sector in the upcoming budget for 2024.
The Finance Minister will be presenting an interim or vote-on-account budget on the 1st of February and has stated that spectacular announcements are not expected, stakeholders in the industry are still optimistic about some of their pending demands being met. One of the biggest expectations is a rise in the home loan interest payment deduction limit under Section 24B. It has remained at Rs. 2 lakh per year from 2014 onwards.
According to the Co-Founder of Square Yards, Piyush Bothra, one of the biggest industry expectations is the increase of the present Rs. 2 lakh exemption on home loan interest to at least Rs. 5 lakh. This adjustment, in his opinion, is vital towards boosting demand for housing, particularly in the affordable housing category.
The demand is backed by the property price increases which have made buyers take bigger home loans from banks. Other experts also feel that raising the limit to at least Rs. 4 lakh will also be helpful in keeping the present industry-wide momentum intact. Affordability is still a bugbear for the housing market with several Government schemes concluding in the recent past. Industry stakeholders feel that the Government should consider re-launching or announcing incentives for reviving this crucial category. Reports highlight how sales figures in the budget segment dropped by close to 20% in 2023 in comparison to 30% in 2022 and close to 40% in the pre-pandemic period. The housing supply percentage in this category across India’s top 7 cities also dropped to 18% in 2023 in comparison to a handsome 40% in 2019.
There is also a longstanding demand for redefining affordable housing to sync it with present market movements. Standardization of the definitions of housing throughout financial and Government institutions will help buyers get the best possible benefits including credit-linked subsidies as per experts. Blanket caps on prices throughout the country are not suitable for defining affordable housing according to experts.
Piyush Bothra feels that the affordable housing limit, particularly in Mumbai and other cities, should be increased to at least Rs. 75 lakh or higher. Many other experts feel that it should be raised to Rs. 85 lakh for Mumbai and around Rs. 60-65 lakh for other big cities. With this move, more homes will be accessible to a higher number of buyers who can tap into lower GST rates and Government subsidies according to them. Granting industry status to the real estate industry will also come with several benefits including simplified processes for developers. Single-window clearance is another demand that the industry has raised for a long time.
Piyush Bothra also feels that cutting the current capital gains tax of 20% will be a good move to incentivize more investments while also enhancing economic stability and growth. Several industry stakeholders also feel that promotion of REITs and InvITs through incentives will boost the industry in the long run. Measures to scale up retail participation in these avenues with extensive frameworks on fractional property assets will help safeguard their interests while scaling up real estate derivative investments significantly according to them.
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Published Date: Jan 10, 2024
