There are high expectations from this budget particularly because demonetisation had a cascading effect on the overall realty sector. Sales volumes fell drastically as prospective buyers postponed their purchase decisions in anticipation of a fall in property prices. Notwithstanding short-term repercussions, this surgical strike by the government to eradicate black money will have far-reaching positive impact on the sector in the long-run. Moreover, it reflected the government’s commitment to streamline processes and eventually make India a favourable investment destination.
Meanwhile, to overcome short-term turbulence, we expect measures that will boost buyers as well as developers’ confidence.
To start with, the government must increase the tax exemption limits on interest and principal repayments for home loans which eventually will incentivise first-time buyers. It must give industry status to the sector, which will boost domestic bank lending. Unavailability of funds at reasonable interest rates often delays construction process and increases the cost of homes. This negatively impacts the end-consumers.
Further, the GST to be applied to the real estate and construction industry also needs to be fixed at a rate which must eventually benefit buyers. The long-pending demand of single-window clearance is the dire need of the hour. If granted, it will give a major boost to the realty sector and reduce inordinate construction delays.
Moreover, due to multiple taxes, there has not been a single REIT listing till date. The government must realise its positive impact on the real estate sector and remove all hurdles governing it.
About the Author:
Jaffer Ali is Founder and CEO, PropUrban.
