By: Anuj Puri, Chairman & Country Head, JLL India
Track2Realty:Provide on-ground impetus for affordable housing In the previous nine-month Budget, the new government outlined its vision for boosting affordable housing. From the upcoming 12-month budget, the Indian real estate sector looks forward to provisions that firm this vision up on the ground.
Provide tax incentives to boost rental housing segment
The Union Budget needs to provide tax incentives for renting out of residential properties. Currently, rental income is treated as normal taxable income. Providing tax breaks specific to rental income will give a significant boost to rental housing segment in the country, and help increase rental supply in the metros.
Enable faster project approvals
Developers have been campaigning for a faster project approval process for good reasons. Faster approvals would beef up the supply pipeline, help bring prices down and also ensure that real estate remain viable as a business. The Budget should provide suitable relief on this front, while simultaneously ensuring that construction quality norms are not compromised in the process and that faster approvals do not result in support infrastructure failure in new precincts being developed.
Implement Real Estate Regulatory Bill (RERA)
The approval of the pending Real Estate Regulatory Bill was deferred once again only recently. It must now be implemented so that the Indian real estate market becomes attractive for foreign investors. The upcoming Union Budget should make this vitally required policy a reality and put an end to the suspense.
Relax counter-productive clauses In LARR (Land Acquisition, Rehabilitation and Resettlement) Act
The LARR (Land Acquisition, Rehabilitation and Resettlement) Act, formulated and re-formulated several times, has so far failed to counter land-related bureaucracy in India and has to date done quite the opposite. In its current form, it is a deterrent for developers as well as institutional investors. The real estate sector is desperate to get past this hurdle, because a lot more land must be made available for primary real estate development as well as for infrastructure development. Given the new government’s focus on ‘housing for all’, fast-tracking of infrastructure and the creation of 100 smart cities across the country, the Union Budget should present a workable and streamlined LARR Act, with significant relaxation in the currently tedious rehabilitation clauses and other norms.
Provide more incentives for sustainable real estate
The upcoming Union Budget should make a clear benefit statement for consumers of green real estate in the country. Stakeholders of the residential real estate sector in India definitely need greater encouragement to go green. Most home buyers in India are still quite averse to paying an extra premium for a green residential project. Because of the low demand, developers are not sufficiently active in this segment. There is a distinct need for a combination of incentives and stipulates to boost the development and consumption of sustainable real estate development in India. The Union Budget should address this lacuna by announcing State-level subsidies for development of green spaces so that developers can keep their development cost at par with non-green spaces.
Fast-track REITs
Many overseas investment funds have so far abstained from the Indian real estate market because of the lack of regulation, political instability and bureaucratic quagmire. The new government has the opportunity of making Indian real estate more investment-friendly and attractive by introducing a revised tax code. Until vital changes to overcome the tax hurdles, REITs – which can literally be a life-saver for Indian real estate – cannot take off. In the interest of the real estate sector as well as the overall economy, the Budget must address this issue.
Encourage FII participation in infrastructure
India is still an infrastructure deficient country and needs large investments to help bridge the infra gap. The Union Budget should make more provisions to increase foreign investors’ participation in this sector.
