Lifestyle

Budget 2016 focuses on housing for the affordable segment

[ecis2016.org] While the union budget 2016 may have focused largely on agriculture and infrastructure, there are benefits for the real estate segment as well, albeit over a long-term period

“We want to buy a home, but prices are still very high and the options in the affordable housing segment remains limited,” says Seema Jain, a housewife.  She continues, “The budget this year has focussed on low-cost housing and many attractive steps have been taken. For first-time home buyers like us, an increased tax exemption of Rs 50,000 on the housing loan can help a lot.”

You are reading: Budget 2016 focuses on housing for the affordable segment

Although prospective buyers in the low-cost housing segment may be happy with the announcements in the budget, doubts remain on what the short-term benefits would be. Over the long term, the budget is likely to improve buyer sentiment.

“The announcement of nil service tax on houses under 60 sq metres in non-metros and under 30 sq metres in metros, will boost affordable housing, as it will eventually bring down the cost of construction,” explains Dhaval Ajmera, director of Ajmera Realty.

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Experts point out that the government has kept its focus on the ‘Housing For All’ mission. Most first-time home buyers target the affordable housing segment and therefore, the budget announcements are in line with the achieving this mission.

More steps required

Nevertheless, there are many who feel that the finance minister could have done more. “The demand for housing in the mid-income segment, is high. Moreover, the tax collected by the government from this sector is 10-14%. Hence, the budget could have provided some relief in service tax for houses of 80-90 sq metres (compact 2-BHK homes), as well,” suggests Vikram Kotnis, founder and managing director, Amura Marketing Technologies Pvt Ltd.

[ecis2016.org] Budget 2016: No short-term benefits for home buyers

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Experts maintain that the Reserve Bank of India (RBI), should now take a proactive step and reduce interest rates on home loans, with particular focus on affordable housing (i.e., for loans below Rs 35 lakhs).

“Although the government did not reduce spending, the budget sent a strong message of prudent fiscal management, by not increasing fiscal deficit targets. Additionally, the government could have announced the implementation of a single-window clearance system, infrastructure status for affordable housing and incentives like higher FSI for affordable housing projects,” feels Amit Oberoi, head of valuation & advisory and research at Colliers India.

While the budget has provided sops to affordable housing projects that benefit buyers and developers, consistent growth may require additional steps such as:

  • Lower interest rates.
  • Single-window clearance system for projects, for faster approvals.
  • Infrastructure development in peripheral areas, which could invite more affordable housing projects.
  • Greater availability of land for developing low-cost housing projects, especially in metropolitan regions.
Benefits for affordable housing in the short-term

  • Housing loan tax rebate increased by Rs 50,000 on loans of up to Rs 35 lakhs, for homes priced up to Rs 50 lakhs.
  • Developers can avail full deduction on profit from affordable housing projects.
  • 100% service tax exemption for construction of affordable housing.
Benefits for affordable housing over the long-term

  • Emphasis on road and infrastructure development, to improve the connectivity to housing projects in peripheral areas.
  • Excise duty exemption to ready-mix concrete will help in quicker delivery of the project.
  • Land reforms and digitisation to reduce disputes in housing projects.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Source: https://ecis2016.org
Category: Lifestyle

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