There appears to be a consensus among the realty industry that the latest budget passed last week has not really provided this industry with conditions for recovery & growth.
What are the positives...
Move to increase affordable housing - Allowing foreign borrowing for low cost housing, extension of interest subvention for one more year for loans up to Rs.15 lakh on property cost up to Rs.25 lakh, service tax exemption on low cost mass housing up to 60 sq mt and Rs.4,000 crore fund for rural housing are the steps that will give a boost to affordable housing.
And exemption on capital gains tax on property, if proceeds are invested in small and medium enterprises
Move to increase outlay on infrastructure and warhousing is a good longterm move too
On the other hand - What are the banes in the industry presently
The industry has been reeling under high property prices for consumers that have stayed away from purchases
For Builders there is a torrid liquidity crunch, costly debt repayment issues, muted foreign capital inflows, increasing inflation coupled with low customer response.
In some of my previous articles, we have covered how the industry statistics showing almost 50 percent of unsold inventory in top cities like the National Capital Region, Mumbai and Bangalore. So much so that even affordable housing has been facing a slow down.
The industry has been crying out for a revamp, for getting recognized by granting it "industry status and giving infrastructure status" to big township projects. This has been ignored, denying easy credit access at cheaper rates.
Not much money is flowing in as banks maintain a strict credit policy and high interest rates. Even from foreign shores money coming in is restricted, as they are wary of a market where rules are not clear.
No tax benefits for those trying to build GREEN buildings either !
No policy initiative to boost rental housing, with no incentive for those who can afford to buy a second home
No increase in limit of interest payment deduction;
No reduction in excise and VAT on construction materials, even those manufactured in factories – like precast materials, precast blocks, RMC etc.
With regards to customers, the load has just been increased by the increase in Service tax. This will most certainly increase rates of homes. Also since the recent RBI directive has excluded stamp duty, registration fee and other levies for total home cost, hence now a customer has to have much more "upfront money" to invest into a home
The imposition of TDS to be deducted and paid by the customer to the Govt will not only increase costs but increase the confusion he will go through.
All in all, the increase in Income Tax deduction compared with the increase in Service tax and other costs hardly give the customer an impetus to invest into Realty, despite a crying need.
And for the Builder Class, they have to continue fending for themselves and continue ripping of the customer in their old ways, whenever things improve !
What are the positives...
Move to increase affordable housing - Allowing foreign borrowing for low cost housing, extension of interest subvention for one more year for loans up to Rs.15 lakh on property cost up to Rs.25 lakh, service tax exemption on low cost mass housing up to 60 sq mt and Rs.4,000 crore fund for rural housing are the steps that will give a boost to affordable housing.
And exemption on capital gains tax on property, if proceeds are invested in small and medium enterprises
Move to increase outlay on infrastructure and warhousing is a good longterm move too
On the other hand - What are the banes in the industry presently
The industry has been reeling under high property prices for consumers that have stayed away from purchases
For Builders there is a torrid liquidity crunch, costly debt repayment issues, muted foreign capital inflows, increasing inflation coupled with low customer response.
In some of my previous articles, we have covered how the industry statistics showing almost 50 percent of unsold inventory in top cities like the National Capital Region, Mumbai and Bangalore. So much so that even affordable housing has been facing a slow down.
The industry has been crying out for a revamp, for getting recognized by granting it "industry status and giving infrastructure status" to big township projects. This has been ignored, denying easy credit access at cheaper rates.
Not much money is flowing in as banks maintain a strict credit policy and high interest rates. Even from foreign shores money coming in is restricted, as they are wary of a market where rules are not clear.
No tax benefits for those trying to build GREEN buildings either !
No policy initiative to boost rental housing, with no incentive for those who can afford to buy a second home
No increase in limit of interest payment deduction;
No reduction in excise and VAT on construction materials, even those manufactured in factories – like precast materials, precast blocks, RMC etc.
With regards to customers, the load has just been increased by the increase in Service tax. This will most certainly increase rates of homes. Also since the recent RBI directive has excluded stamp duty, registration fee and other levies for total home cost, hence now a customer has to have much more "upfront money" to invest into a home
The imposition of TDS to be deducted and paid by the customer to the Govt will not only increase costs but increase the confusion he will go through.
All in all, the increase in Income Tax deduction compared with the increase in Service tax and other costs hardly give the customer an impetus to invest into Realty, despite a crying need.
And for the Builder Class, they have to continue fending for themselves and continue ripping of the customer in their old ways, whenever things improve !