The Union Budget 2019 has focused on the nation’s growth and brought a positive sentiment to the overall economy. With its focus on the agricultural and rural sector, infrastructure, education, job creation, and digital economy, it is a budget for all.
India’s real estate sector has a reason to cheer as Finance Minister has announced a range of sops for real estate developers as well as homebuyers in the budget. These measures are expected to boost the housing sector as well as investor sentiments in the times to come and will provide ample opportunities for the homebuyers to invest.
On many fronts, this is a favourable and bold budget for the real estate industry. A massive boost for infrastructure will not only benefit the realty sector but also help other industries and create ample employment opportunities. The government’s focus on infrastructure development of tier 2 and 3 cities will surely make these cities ready for the next round of urbanisation.
The last interim budget bought cheers to the Indian real estate industry with a series of favourable initiatives that gave a strong push to the realty growth. Much on expected lines, the government in Budget 2019 continued with its thrust for affordable housing by proposing to set up Rs 1.95 Crore houses under Pradhan Mantri Awas Yojna in the next two years.
Amongst the notable announcements for the real estate sector is the announcement of an additional Rs 1.5 Lakh deduction in income tax for affordable housing. This will drive the much-needed urgency in sales and bring the fence-sitters back into the market soon.
Given the housing shortage in the country and the objective’ Housing for All by 2022’, the announcement of new reforms for rental housing will be a big boost to the sector. Currently, the high cost of houses and high property taxes lead to a low rate of return (ROR) from rental housing makes renting out an un-remunerative proposition.
The new model tenancy is expected to balance the rights and responsibilities of both landlords and tenants that will make the rental market more efficient and streamlined across the country. Moreover, the use of government’s land parcels for public infrastructure and affordable housing shall further narrow the demand-supply gap. The decision to allow foreign institutional investors to subscribe to REITs and INVITs is also a welcome move.
While the government has taken several concrete measures, there is still a long way to go. We hope that the government looks into some of the critical concerns raised by the industry and addresses the same soon.
To bring back growth in the sector, which is so vital to any developing economy, we expect the government to impart industry status to the sector. We also expect single-window clearance, which has been a long pending demand from the sector.
There was a significant expectation of cutting GST rates to a single, standard rate, and not have multiple rates or taxes. The abolition of stamp duty or its incorporation under GST would have also been an added advantage.
The need of the hour is to lower interest rates, which will help resolve the present liquidity crisis and boost housing demand. Also, there is undoubtedly a need to relook at the tax structure.
Going forward, we expect continued momentum for the Indian real estate market to attract new investments into the sector. In conclusion, it can be said that the budget 2019 has set the stage for the economy to grow positively and achieve new heights through its reform measures.
This article is contributed by Surendra Hiranandani, Founder & Director, House of Hiranandani.
(The views expressed here are solely those of the author and do not necessarily represent or reflect the views of RoofandFloor)
