NAREDCO Budget Expectations Include Ease In Liquidity Crisis, Support For Rental Housing
In the run-up to the Union Budget, developers want the government to ease the liquidity crisis, take steps to boost rental housing and rationalize taxes among other demands
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The real estate developers have put forth a clutch of demands before the Finance Ministry ahead of the Union Budget scheduled for February 1, 2020. Some of these demands include immediate support in terms of ease the liquidity crisis; measures to boost rental housing and demand to rationalize personal and other forms of taxation. Developers also want a drastic 50 per cent cut in Stamp Duty for all real estate transactions.
“Fiscal stimulus to the real estate sector will have a manifold effect on 269 allied industries with multi-dimensional impact on enhancing the GDP growth inclusive of employment creation. It will play a pivotal role in achieving an ambitious target of $5 trillion economy,” said Dr Niranjan Hiranandani, National President, NAREDCO.
The National Real Estate Development Council (NAREDCO), an apex body of leading developers got together in the capital to voice their demands from the government for the real estate sector, particularly the housing segment.
In this Budget 2020, the Indian real estate sector expects a holistic solution rather than the piece-meal solutions that have been offered so far. The problem of liquidity is a complex one, what is needed is the resolution with execution speed – so, there is a need for ‘acceleration’, and NAREDCO hopes that the Hon’ble Finance Minister does the needful in the upcoming Budget proposals, Hiranandani said.
Now the developers are looking forward to some bold fiscal measures in key areas of concerns, for example, the Liquidity Issue.
Real Estate Industry is facing serious challenges related to liquidity crunch which needs bold fiscal measures for resurrecting the reeling industry. “The industry has been demanding the restructuring of loans or one-time roll-over in case of the stressed assets at the options of banks. In such cases the borrower will retain the asset classification of the restructured standard accounts as standard and the same will not be treated as NPA,” Hiranandani said.
On the issue of ‘Interest Rates & Home loans’ NAREDCO said it wanted the Interest rates on Home Loans shall be reduced to 7% p.a and the benefit of a rate cut should transmit to end-users in order to revive the demand.
Reduce Stamp Duty, Boost Rental Housing
NAREDCO also proposed a reduction in stamp duty by 50% for all real estate transactions registered on or before 31st March 2020 as it shall induce the fence-sitters to turn into the actual home buyers spurring up the demand and consumption.
NAREDCO is hoping for some incentives for Rental Housing. “To achieve the target of Housing for All by 2022, rental housing will play a vital role. With rapid urbanization and migration, there is huge need of developing rental housing model to befit the need of the ever-increasing population in urban areas. In order to achieve this, we have recommended some tax incentives,” said Hiranandani.
The leading developers want the government to redefine “Affordable Housing”.
Recently, the definition of affordable housing has been amended in GST and Income Tax Laws and as a result, the affordable tenement has to meet the dual condition of the area and also the price cap of Rs 45 lakhs. As a result, almost all the houses in the MMR and most of the houses in NCR and other metros do not qualify as the “affordable housing” resulting in the loss of benefit of reduced GST rate of 1% and also the benefit of tax exemption from such projects. “We recommend that the condition related to a price cap of Rs 45 lakhs be immediately abolished and the benefits are restored to all the houses which have an area less than 60/90 Sq meters,” the NAREDCO National President said.
Real estate expects support from the Budget to be able to play its role in GDP growth; because it is not going through the best of times. Buyer interest has been erratic at best; sales have plummeted to historic lows. Hopefully, the Budget will offer fresh stimulus for real estate as the sector has had to deal with a series of disruptions, said Hiranandani.