What The Real Estate Sector Want From Budget 2017

By Author: The Hemisphere
Total Articles: 36
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It is anticipated that these changes will result in significant consolidation in the industry with the small unorganized players being washed away and the larger organized players taking greater market share. The real estate sector has been, in the limelight even earlier, due to reforms over the last few years with the relaxation of Foreign Direct Investment (FDI) norms, introduction of the Real Estate Investment Trust (REIT) regulations, the government's mega housing mission 2022. While one would have expected these reforms to have created significant momentum in the sector, the on-ground picture does not seem to reflect it thus far with not a single prospectus for REIT being filed and even the real estate FDI reflecting a declining trend during 2015-16 and 2016-17. The demonetization and proposed amendment to the Benami Properties Act have added to the woes of the industry in the short term with the housing and office space demands having slacked though there are hopes of these yielding long term benefits with the falling interest rates and anticipated government thrust to the sector.

WHAT HOME-BUYERS NEED FROM BUDGET ...
... 2017

Unless some proactive measures are taken by the FM to make housing more affordable and induce buyers to buy homes, the government's vision for 'Housing for All by 2022' will remain a dream only. While the present government has taken several policy initiatives to give a boost to the ailing real estate, its demonetization drive again took the sheen off the sector, which is now betting big on the upcoming Budget for revival of fortunes.

Home-buyers have pinned their hopes on the Budget as they believe that their dream homes are still beyond their reach and even tax incentives on home loans are inadequate.

Here we are taking a look at home-buyers’ expectations from the upcoming Budget:

1. Bigger Tax Incentive For First-Time Home Buyers

First-time home buyers were given additional Rs 50,000 tax exemption in the last Budget for a house worth up to Rs 50 lakh with a loan of up to Rs 35 lakh. This announcement mostly benefited end-users in tier-II, III cities, but not as many in the bigger metros where housing is largely above this specific limit. So, home-buyers, especially those residing in big cities, are expecting the upcoming Budget to bring in similar tax exemption for first timers in the metros too. Or, a higher limit specific only to the bigger metros should be introduced.

Also, middle class youth buying their first house in an affordable project should get additional income tax incentives for at least five years. Given the lack of institutionalized rental housing in Indian cities, such a move could spur many fence-sitters into moving out from their rented apartments into owned houses. It could also make developers come up with products suiting this segment. In the previous Budget, no financial protection was offered to end users against project delays.

2. Higher Tax Saving On Housing Loan & House Insurance Premiums

Home-buyers are expecting tax benefits to be further relaxed. In fact, keeping in view the government’s agenda of providing housing for all, it is imperative that some tax concessions are provided in the Budget. One such option could be to increase the tax deduction for interest paid on housing loan from Rs 2 lakh to Rs 3 lakh. This will also provide an immediate boost to the banking services sector, which is flush with funds post demonetization and looking at avenues to lend money to the masses. The tax exemption limit should be auto-set to match inflationary trends in a financial year. Also, tax concessions on house insurance premiums could be introduced to encourage end users to insure their homes.