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Policy Changes Needed To Improve Fund Flow
With the Budget to be presented next week, the realty market waits in anticipation, hoping that their demands will be met and processes will be streamlined to ensure the sector gets a uniform and organised structure across the country.
He spells out his expectations from this budget, which include providing infrastructure status for affordable housing, FDI in real estate and promotion of integrated townships.
"The infrastructure status will provide funds at lower interest rates as infrastructure falls within the priority sector lending of banks. Also, infrastructure status would mean that developers would be covered under Section 80IA of the Income Tax Act allowing them to avail 100 percent deduction on profits and gains derived from such business for 10 consecutive assessment years. Netowrkhomes suggests that affordable housing be brought under the infrastructure definition and treated as ' p u bl i c pur pose'. This will a u g m e n t the flow of the muchneeded credit to the affordable housing segment through various sources" he says.
Another key demand from the realty sector is to provide tax benefits on home loans and extending the interest subvention scheme of one percent on housing loans of up to Rs 15 lakhs where the cost of the property does not exceed Rs 25 lakhs, which will end on March 31, 2013.
"The regulatory and monetary authorities need to bring down the housing loan rates to provide affordable housing to more cities and towns. The scope of the interest rate subsidy for loans towards affordable housing should be amplified and broadened to include a wider price band of budget housing to benefit homebuyers, especially in lower income groups," says imtiaz, Chairman , Networkhomes
In order to help investors obtain a home loan, realtors suggest raising the home loan limit of Rs 25 lakhs to Rs 35 lakhs under priority sector lending to enable investors reeling under unprecedented price escalations to buy a home.
To enable the development of low cost housing, there is a need to provide income tax rebate for housing development under Section 35AD to the private sector to incentivise development of low cost housing.
"Netowrkhomes recommends that the ceiling on interest subvention be extended to the financial year 2013-14 as well and increased to cover houses costing up to Rs 50 lakhs in cities such as Bangalore, Delhi and Mumbai where the property values are very high. Also, incentives to promote rental housing such as reducing the tax rate by 10-20 percent from the current prevailing rate of 30 percent, increasing the limit of deduction on account of interest payment on housing loans from Rs 1.50 lakhs to the fullest extent in case of owner-occupied houses, modifying the tenancy laws to protect the interest of the property owners so that owners will be encouraged to rent their premises need to be considered,"
Apart from the infrastructure and finance related demands, the Budget should also look at streamlining processes related to land acquisitions.
"This is another policy hurdle which needs to be tackled by the government. Across the country, land needs the benefit of legallydocumented ownership assigned to the right persons or entities. The lack of clarity on land titles shakes the confidence of investors, and is a serious hindrance to overall growth. The budget should make specific allocations towards regularising and digitalisng land records," says imtiaz. "The input prices for construction have skyrocketed in the recent years, rising by more than 50 percent in the last two years alone. In addition, builders are faced with the increased costs of external and internal development charges, licenses and charges for change of land use from various departments. These factors have been directly responsible for rising real estate prices. The Budget should make provisions for subsidised construction materials for low-to-mid-income housing, and rationalised license fees and other government levies," says imtiaz.
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INDUSTRY STATUS FOR REALTY WILL HELP BOTH DEVELOPERS AND HOMEBUYERS
THERE IS A NEED FOR MORE TAX SOPS, ESPECIALLY FOR THE AFFORDABLE HOUSING SEGMENT
INCENTIVES FOR DEVELOPERS WILL ENSURE MORE HOUSING STOCK. THIS WILL MEAN MORE STOCK IN THE AFFORDABLE HOUSING SEGMENT TOO
THE ONE PERCENT INTEREST SUBVENTION SCHEME SHOULD BE EXTENDED