“We must appreciate the fact that the government is very serious on the mission of ‘Housing for All’ and in the same light we have seen some extremely positive announcements in the budget today. The real estate industry thanks the government for understanding the need to enable efficient supply of housing stock in the country.
Affordable Housing has been declared ‘Infrastructure’ with all its associated benefits. Additional refinance of INR 20,000 crore from NHB and lower interest rates resulting from increased liquidity in the banking sector would add to the funds for the sector at lower costs to the ultimate consumer. The new Credit-Linked Subsidy Scheme for Middle Income Group with allocation of INR 1000 crore in the budget for 2017-18 announced. Here too, the government has shown wisdom in making a very big effort to enable the home buyer to access cheaper capital.
Long term capital gains tax benefits on housing which could be availed after 3 years has been brought down to 2 years. Real estate sector as an asset class would gain as a store of value. This is an extremely good news for real estate investors as they can book profits by paying a bare minimum income tax at the end of two years only on profits earned from sale of property.
Affordable housing projects can be completed over five years instead of three years earlier to avail of 80IB and this was very necessary keeping in mind the time taken to get various permissions for real estate projects. All in all a very good budget for real estate and also for the entire nation considering that there are going to be very big spendings in infrastructure as well. This along with real estate will create many jobs and accelerate the manufacturing industry contributing to the ‘Make in India’ effort of the government.”
The affordable housing sector is finally set to get infrastructure status. This was a long-awaited announcement. While we are yet to read the fine-print, this is indeed an important step to promote access to priority lending thereby spurring supply of low cost housing units across various cities in India. Relaxation in area measurement as well as completion timelines to seek tax exemption are welcome steps. Further, the government has also increased allocation under the PMAY scheme. This will encourage home buyers and further boost participation from the Private players.
The airport authority of land act amendment is yet another positive move which will allow development of land around the airports. This will further improve infrastructure and more importantly increase funding for the development of the airports. This is over and above the record allocation made to the overall infrastructure sector.
In order to encourage greater fund flows into the economy, the FM has announced abolition of the FIPB. While a clear policy outline is yet to be revealed, this is another positive step to liberalize FDI policy framework and ease regulatory hurdles in attracting investments.
The government has also been accommodative of the concerns of the real estate sector. The relaxation on long term capital gains, joint development agreements, tax rebates for builders will help reduce their tax liability.
While greater rebates were expected in individual tax rates, nonetheless the rebate for individuals earning upto 5 lacs will help increase their disposable incomes. This might help spur consumption and also have a positive impact on demand for housing. ”
“The Budget 2017 broadly focussed on the rural economy, infrastructure, affordable housing, employment, digital economy and fiscal discipline. We believe that it is a fairly balanced Budget. The decision to invest in rural areas, infrastructure and poverty alleviation whilst maintaining fiscal consolidation is to be applauded.”
“The Budget, has partially addressed one of our long-standing demands of granting infrastructure status to the real estate sector by announcing infrastructure status for affordable housing sector. Needless to say this will incentivise real estate developers to focus on affordable housing which is where the maximum demand for homes lies. An industry status will help developers in accessing capital at lower costs. The announcement to abolish Foreign Investment Promotion Board will make it easier to get foreign funding through the automatic routes. Tax free profit for five years for affordable housing developers will give more time to builders to finish projects. The government has redefined “affordable housing”, which is important in a country like India with varied markets. We are glad the government has recognised this with its announcement that it will count carpet area of 30 and 60 sq meters for affordable housing instead of built up area. The limit of 30 sq meters applies only in municipal cities of four metropolitan cities and in the rest of the cities the limit is 60 sq meters, which will increase housing size by 30%. This will encourage developers to build affordable homes.
Real estate developers holding large amounts of real estate inventory will get some respite with the reduction of long term capital gains tax period to two years from the erstwhile three years. The government’s announcement to build 1 crore houses for the poor by 2019 along with the allocation of Rs 23,000 crore for Pradhan Mantri Awas Yojana will bring the country closer to realising “Housing for All” mission by 2022.”
Infrastructure and construction:
Infrastructure is a priority for this government. We have seen this reflected in this year’s Budget as well. The allocation for infrastructure is substantial at over Rs 3,90,000 crore. It has provided Rs 2.41 lakh crore for transport sector, including railways, road and shipping. Allocation for national highways has been stepped up to Rs 64,000 crore from Rs 57,676 crore. Higher investment in infrastructure is much needed and will spur economic growth.
The Union Budget 2017-18 has now set in motion a series of structured reforms process for the housing sector in the country. The announcements made in the Finance Bill focuses on the upliftment of the urban poor and the under privileged within our cities and rural areas”.
Assigning the infrastructure status to affordable housing gives the segment the necessary push for further growth. The aim to build 1 crore housing in rural areas by 2019 for the homeless aligns with the government’s agenda to bring 2 crore housing by 2022 under its Pradhan Mantri Awas Yojna (PMAY). Affordable housing being included under infrastructure will now be able to receive liquidity support from a variety of funds such as pension funds and insurance firms, which are mandated to contribute significantly to affordable housing”
Parveen Jain, President NAREDCO
“Infrastructure status to affordable housing comes as a landmark announcement for the consumers and the real estate industry. A long-standing demand of the sector, the government has realised that housing & infrastructure can be two pillars to increase GDP and accelerate economic growth.
Easy and dedicated access to institutional financing, higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing in India, making it the core driving segment for real estate. On the other hand, long term financing at lower rates will reduce costs of construction for developers allowing them to pass on benefits to consumers. The new status will increase the resource allocation for the sector, catalysing housing supply and reducing the supply gap.
This budget has brought us a step closer in achieving the mission of providing Housing for all. Implementation of these schemes will be essential for its success. Clarity on the definition of ‘affordable housing’ will be useful. This is very beneficial for Tata Housing as a pan-India developer which is currently developing more than 40 million sq. ft. of affordable housing”
Brotin Banerjee, Managing Director and CEO, Tata Housing Development Company
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