Union Budget 2021: real estate hopes for a boost
Budget 2021 is expected to lay key emphasis on the real estate sector.
Home buyers and developers are looking for a higher tax relief to spur demand. The cap of Rs 2 lakh on housing loan interest under income tax deductions should be extended up to Rs 5 lakh.
Experts feel the government should relax the fundraising norms and ensure the implementation of alternate investment funds to ensure enough liquidity for the sector. More importantly, the government should incentivise the private sector to invest in affordable housing.
Niranjan Hiranandani, national president, NAREDCO, said: “To promote rental housing the deduction of 30 per cent from the annual rental income (for purpose of maintenance) should be increased to 50 per cent.”
Industry body CII has called for a special focus on low-cost housing and an extension of the interest subvention scheme so that it can cover total housing cost of up to Rs 35 lakh.
There has also been demand to raise allocation under Pradhan Mantri Awas Yojana (PMAY) from the Rs 27,500 crore allocated in the Union Budget 2020-21 to ensure every Indian has a home in the near future.
“To provide relief to stressed homebuyers, funds could also be set aside for the National Building Construction Corporation to complete stalled projects which have been stuck due to fund shortage. This would boost consumer sentiment and rev up the demand cycle. There could be a provision to recover the costs involved once the project is completed,” said CII in its proposal.
The industry body has also called for increase in the rebate on housing loan to help boost demand for housing and push construction activity. While the rebate of interest paid on housing loan (for self-use) has not been revised since 2014 when it was raised to Rs 2 lakh from Rs 1.5 lakh, CII has called for an upward revision given the rise in the capital value of houses.
Sharad Mittal, Director and CEO of Motilal Oswal Real Estate, said in a note that residential real estate witnessed a strong recovery in the current financial year owing to low interest rates, pent-up demand, developer discounts and temporary stamp duty waivers.
"Over the last six months, residential real estate has witnessed a strong recovery wherein almost all top cities are clocking record sales as compared to previous years. Customers and investors who had stayed away from residential real estate over the last 4 to 5 years are returning to the sector. Return of this lost demand is imperative to the revival of residential real estate, which has been going through several challenges over the last 4 to 5 years due to a spate of regulatory reforms and funding crises," Mittal added.