Homebuyers are not impressed with developers’ budget wish list that ignores the buyers’ concerns.
“I am reading these newspaper reports about the real estate sector demanding so many things with the Union Budget. Most of these demands are for their financial health than understanding the market from common homebuyers’ perspective like us. Do we matter at all in this eco system where neither the government nor the developers understand what keeps us away from the property market,” says Shweta Sanyal, an advertising professional in Mumbai.
It seems most of the demands of the Indian real estate on the eve of Union Budget every year are so self-centered that it fails to impress either the Finance Minister or the homebuyers. Even though there are customary voices to cut down the interest rates and increase the income tax rebate slab, yet the major focus has always been on the financial package for the sector, infrastructure status and industry status for them.
Rikki Sahni, a tax consultant points out, “There is no denying that the infrastructure status and priority lending for housing projects will do a world of good for the financial health of the sector. Similarly, the industry status might prove to be handy as far as ease of doing business is concerned. But will these benefits pass on to the end users? I have my doubts.”
In the absence of earning the trust of the end users as far as the demands are concerned, the sector has failed to get the homebuyers on board. The focus is so much on demanding the financial package for the sector that even if there are a few rational suggestions, it is seen as another means to extract for the sector.
For example, the industry body NAREDCO has suggested that the government land, wherever available, should be used as equity and government agencies encouraged to assemble additional land as much as possible.
India is short of 18.78 million housing units and 96 per cent of it is in EWS and LIG categories. Government is targeting to build 2 crore housing units by 2022. All this will be possible if land and bank financing is made easy.
However, along with this suggestion what is more important for the industry body is its demand for the industry status. Anuj Puri, Chairman & Country Head of JLL India seems to understand this when he says the Union Budget should pay specific heed to this pressing need to offer financial protection from project delays to home buyers. According to him, on purchase into an under-construction property, buyers can only claim tax benefits of Rs. 2 lakh after possession if construction is completed within three years. The benefits reduce to Rs. 30,000 if the builder delays construction beyond this – and they pay higher interest. First-time homebuyers purchasing properties for self-use additionally pay rent.
“Instead of allowing homebuyers tax benefits post-possession, the Union Budget should make a provision that allows these from the time they start paying interest on housing loans. This will ease their monetary burden considerably and make increase the velocity of home loan disbursements,” says Puri.
There are some other suggestions which could have gone down well in the collective consciousness of homebuyers. For example, if an under-construction property is purchased from capital gains, its construction must be completed within three years of its sale to avail exemption. There can be delays by developer in such cases too. These deductions should be brought at par and the construction timeline should be extended from the current three years to five years.
Pro-consumer suggestions that could have helped to revive the sector would have also found a chord with the homebuyers. More importantly, when the builder and buyer is on the same page with the budget wish list then it could not have ben be ignored by the Finance Minister as well. However, there has been so much focus on the repeated demands for the sector that the larger picture was missed in the process.
By: Ravi Sinha
Track2Realty Exclusive
