The Indian real estate has time again proved its mettle regardless of the many adversities it had to deal with during the first and second waves of Covid. Once again, the country seems to be in the thick of the situation. A lot of us have made alterations to our everyday life, but the one thing that has been further reinforced after the second wave is the importance of owning a home.
NoBroker’s annual real estate report suggests that 76 percent of people are considering buying a property in 2022. While banking institutions have made the deal sweeter by reducing home loan interest rates, a few more incentives in the budget could make the deal irresistible and ensure faster recovery of the sector.
Redefine affordable housing
The definition of affordable housing needs to be readjusted as standardization of sizes might work across cities, but the standardisation of prices doesn't. What one can buy in tier two cities in Rs 45 lakhs is substantially different from what one can buy in the same budget in urban cities.
Incentivising affordable housing
More incentives for affordable housing could be announced in the upcoming budget. SWAMIH fund was created in Sept 2020 to give relief to homebuyers of stalled projects by providing last-mile funding to affordable and middle-income housing projects. SWAMIH funds need to be continued and more capital is required to be allocated to ensure a larger number of projects.
Make real estate an investment class
The NoBroker report indicates that 16 percent of people are looking to buy a property for investment. This is a significant jump from last year. It also suggests that 76 percent of people still consider property as the best investment option against stocks/SIPs, gold and bitcoin! The government could announce measures that would make real estate an investment class by giving tax benefits on a second home purchase. Standard deduction of 30 percent on the net rental income should be revised to increase interest from investor class. Also, there should be quick implementation of the Model Tenancy Act by the states.
Tax sops
Currently, many investments qualify for deductions under section 80C which has an upper limit of Rs 1.5 lakhs. Increasing this limit could trigger greater demand in real estate. Introducing a separate section for deduction of loan repayment could ensure a more robust demand.
Budget 2022 could also look at revising the limit for deduction of interest on housing loan under Section 24 (b) from the current Rs 200,000 to Rs 10,00,000. The increase in the ceiling limit would incentivise buyers.
Faster clearance of projects to reduce costs
This has been a long-standing demand by the sector. The issue impacts delivery timelines which causes financial losses to the builders and home-buyers. The multiple approvals if processed through single window clearance could significantly cut down construction costs and avoid delays.
Benefits for tenants
Given that a lot of people have gone back to working from home and although in lesser numbers, the reverse migration has happened, the budget could include higher HRA to boost rental segment. Faster implementation of Model Tenancy Act would also help the rental segment.
A lot of these demands have been long standing. The sector is capable of uplifting the economy like no other and therefore, it makes a lot of sense to adopt as many of the changes as possible.
—The author, Saurabh Garg, is Cofounder and Chief Business Officer, NoBroker.com. Views expressed are personal
(Edited by : Ajay Vaishnav)
First Published: Jan 14, 2022 7:10 PM IST
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