Country’s first woman Finance Minister has presented her maiden budget on July 5 and the real estate sector which has lots of expectations with her has got many announcements to cheer. Starting from rental housing to affordable housing and tax benefits to better infrastructure, here are some of the key highlights that are going to add feathers to the real estate market of India:
Reforms in Rental Housing
Speaking during her Budget speech, FM Nirmala Sitharaman said, “Current Rental Laws are archaic as they do not address the relationship between the Lessor and the Lessee realistically and fairly. A Model Tenancy Law will also be finalized and circulated to the States. It is proposed that several reform measures would be taken up to promote rental housing.” Once these reforms will be made, the rental market will get a major boost which at present is lacking in many parts.
FM also announced various reforms in the affordable housing sector which at present is already gaining momentum. To give more thrust to this sector and ‘Housing for all’ initiative’, Sitharaman has announced that the government proposes to utilize the land parcels held by central ministries to develop affordable housing.
Speaking on the numbers of PMAY houses, she said that till date, overall 26 lakh homes have already been developed under PMAY (Urban) and as many as 1.5 crore houses under PMAY (G) has been constructed in the past five years. For FY 2019-20 and 2020-21, 1.95 crores more houses to be approved under PMAY (Gramin), while 47 lakh houses are under construction under PMAY (U).
Due to the use of better construction technologies, the average time to complete affordable homes has been reduced to 114 days from 314 days in the past. She further said that the government is also proposing to promote JVs and other concessional offers for the realtors to develop affordable housing.
The biggest announcement which is definitely going to boost buyer’s confidence in order to purchase their dream home is tax benefits of additional 1.5 Lakh on the interest paid on the home loans (March 31, 2020) to purchase an affordable home up to 45 lakhs. This will be again a big booster for the affordable housing sector.
She also proposed to extend the period of exemption of capital gains arising from the sale of residential house for investment in startups to March 31, 2021.
Housing Finance and REITS
To tighten up the noose of the housing finance companies, FM has announced that the Reserve Bank of India (RBI) will now take over as the regulator of these companies from the National Housing Board (NHB).
REITs have already made many transformations in the liquidity hit the commercial sector. To further strengthen this sector, FM has announced to open gates for the foreign institutional investors to subscribe in REITs and INVITs.
To improve infrastructure and connectivity, FM has proposed to give more focus and steady development of RRTS, metro rail, and other Transit Oriented Development (TOD) that will help in the emergence of new commercial, retail and entertainment hubs in and around these regions.