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Interest subventions on home loans key to 'Housing for All', says NAREDCO Prez
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SME Times News Bureau | 23 Jan, 2022
With a target in hand to achieve ‘Housing for All by 2022, the Centre
should consider providing full interest subvention on affordable loans
for those who are purchasing their first home, said Rajan N. Bandelkar,
President of National Real Estate Development Council (NAREDCO).
NAREDCO is an autonomous self-regulatory body under the aegis of the Union Ministry of Housing and Urban Affairs.
"The
government aims to provide housing for all Indians by 2022. In 2014, It
was fair enough to say that by 2022 we will fulfil our goal... We are
already in 2022 and there are still many people staying in rented
premises. In the interest of consumers, we as developers feel the Centre
should consider something on the interest subvention," Bandelkar said
in an exclusive interview with IANS.
In 2019, the Centre in its
Budget, increased the maximum amount of interest paid on a housing loan
-- valued upto Rs 45 lakh -- eligible for tax benefits to Rs 3.5 lakh
from Rs 2 lakh under the affordable housing plan, initially for a year.
Again in the 2020 Budget, the same was extended for another fiscal year i.e. till March 2021.
"They
have increased it to Rs 3.5 lakh while keeping the cost of the property
capped at a maximum of Rs 45 lakh. Interest on loans worth Rs 45 lakh
typically breaches Rs 3.5 lakh levels and there would be few
beneficiaries who would be able to reap benefits under the scheme.
Hence, the Centre should remove the limit with open hearts for first
home buyers," Bandelkar said.
He further said the Centre may have
apprehensions that property prices may shoot up with such full interest
subventions. But it is not the case as people having their first home
would apparently not intend to invest on a second one.
Also, NAREDCO would assure all possible support that may be needed, in achieving the 'Housing for All' goal by 2022, he added.
On access to finances, Bandelkar said banks typically prefer to lend to large players.
"When
the government extends ECLGS, the rate of interest declines
substantially. So, for those players who are into affordable housing
space, the government must guarantee those loans just like the ECLGS."
On capital gains in the real estate market, he said it should be at par with capital markets.
"The
one-year capital gains in the share market is 10 per cent and for
real-estate it is 20 per cent for a two-year period. For real-estate
too, it should be brought down to 10 per cent," he opined.
He also believes the government should once again resume input tax credit facility under the GST for the real-estate sector.
"Both
the options should be open and the developers will choose whether to
opt for the ITC or otherwise, according to their preferences."
On
asked about the possibility whether the Centre, in FY23 Budget, would
continue to focus on capital expenditure or shift towards welfarism, he
said: "Focus on capital expenditure is a good thing. It leads to
employment generation besides keeping money in circulation. Capital
expenditure is always better as we are a developing country and we must
focus on that. See, real estate is the major employer after agriculture
and nearly 250 industries are dependent on the realty sector."
To
tide over the Covid-19 crisis, a "booster dose" is needed on the
capital expenditure front, which would in a way, directly or indirectly,
support the real estate industry.
"For the real estate sector to
grow, affordable housing must grow as the majority of the volumes come
from it. In comparison, the luxury segment is very small."
Besides the affordable home segment, commercial space is also seeing an uptick in demand post pandemic.
"Almost
all ready properties are leased out and the commercial sector is
expected to pick up (further). Also, because of businesses via
e-commerce, the warehousing business has also turned attractive."
On
the recent trend of warehousing business going into the hinterlands, he
said it is because of low cost of land as well as it helps in
efficiently delivering services to the last mile.
"Because of this, rural areas have also started witnessing development, job creation, and revenue generation."
Moreover,
on being queried about the potential impact of the ravaging third wave
of Covid in the realty space and whether the potential homebuyers would
defer their purchase plan, he opined that there would be no material
change in demand.
"States must come up with reduced stamp duty
and premiums on properties...Taking cues from those states where it had
been done recently, others must follow suit and replicate the same and
take the benefits."
He said that Maharashtra has reaped the
benefit because of the reduction and therefore requested the State
government to reduce the stamp duty once again.
In a bid to
provide a boost to the realty sector, the Maharashtra government reduced
the stamp duty on property registrations during September to December
in 2020 and January to March in 2021.
On declining profit margins due to rising commodity prices, he said so far the developers have not raised the property rates.
"Having
that said, now property rates may start increasing. Initially, we
thought it was a temporary pressure on inflation and will subside
gradually, but it is not the case. If prices of steel and cement don't
ease, prices are bound to rise."
"In some places, some large developers have already taken a price hike by 5-10 per cent in the affordable housing segment."
Lastly,
for smooth and effective functioning on the regulatory side, Bandelkar
said that all the approving authorities must come under the ambit of the
RERA.
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