FM budgets balm for realty sector

While the government’s focus on affordable housing seems to be continuing, the Budget 2019, presented by the Finance Minister, remained a mixed bag for the realty sector. Easing the financial crunch being faced by developers, industry status for the whole sector,  single-window clearance, lower home loan interest rates, subsuming stamp duty and GST, were some of the key expectations that were skimmed over. However, by keeping affordable housing its top priority, the  government seems to be wooing the fence sitters to invest. Some of the key highlights for the sector are: 

Favoured segment 

Continuing with its policy push for affordable housing the government has proposed  additional tax deduction of Rs 1.5 lakh on interest paid on home loans taken up to March 2020. Houses priced up to Rs 45 lakh fall in the affordable category and according to the Finance Minister tax deduction would translate into a reduction of Rs 7 lakh paid over a priod of 15 years.

To attract more funds into the real estate and infrastructure sectors, the Budget proposed to allow foreign portfolio investors (FPIs) and NRIs to subscribe to listed debt papers of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

Rental law amendments

The FM also turned the spotlight on the tenancy law by mentioning that a model tenancy law will be finalised and circulated to states. Welcoming this move Ajit Panda, Founder, Spaciya Advisors, says, “This will help in organising the real estate as a bankable asset class for annualised returns and will pave the way for large scale professional investments into the sector". Saurabh Garg, Co-Founder and CBO, NoBroker.com, said “The need for such a reform is immediate, as the current mandate in most state-enacted rent control laws de-incentivise landlords from renting out their flats. The eviction process is also extremely long and cumbersome for homeowners”.

1.95 cr houses to come up under PMAY-Gramin in 2 years

The government will build 1.95 crore houses under the Pradhan Mantari Awas Yojna (PMAY) — Gramin over the next two years. The FM said that the time taken to complete construction of houses under the PMAY has been reduced to 114 days from 314 days in 2015-16 due to use of direct benefit transfer (DBT) platform. The FM also informed the House that more than  81 lakh houses have been sanctioned, out of which construction has been completed for 26 lakh houses under the PMAY Urban.   — TNS and Agencies