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Home, sweet home: Big boost to rental, affordable housing

Modi 2.0 government's maiden budget has renewed focus on affordable housing, with more sops to the real estate sector. Also, the government will be unveiling a rental housing policy soon.

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Modi 2.0 government's maiden budget has renewed focus on affordable housing, with more sops to the real estate sector. Also, the government will be unveiling a rental housing policy soon.

The sops to affordable housing sector range from opening up of public sector enterprises and government lands to additional income tax exemption for first-time buyers.

The sector had asked the government to open up government land banks so that more housing stock can be created on plots undisputed. "The proposal will create an enabling environment for accelerated growth in residential real estate in India," said Arvind Subramanian, CEO, Mahindra Happinest (affordable housing arm of Mahindra Lifespaces).

Data with real estate research company Liases Foras shows affordable units (priced less than Rs 45 lakh) contribute 53% of the unsold supply and 53% of sales across 50 cities in India.

"With the revised changes, executives drawing a salary of up to Rs 10 lakh would benefit as apart from an exemption of Rs 3.50 lakh, they are also entitled to exemption of Rs 1.50 lakh under 80C of Income Tax Act. Also, under the Pradhan Mantri Awas Yojana, the government offers subvention incentives which would effectively give them benefits of close to Rs 7 lakh in the long run," said Pankaj Kapoor, founder and MD, Liases Foras.

Gaurav Gupta, director, Omkar Realtors & Developers is of view that more fence-sitters and first-time buyers would now take plunge in property buying, thereby providing further momentum to this beleaguered sector.

FM Nirmala Sitharaman termed existing rental laws as "archaic", adding "they do not address the relationship between the lessor and the lessee realistically and fairly. A model tenancy law will also be finalised and circulated to the states."

Once this policy is out, the migrants would benefit from the revamped policy. On May 27, DNA Money had reported about a policy on rental housing in the works.

On the affordable housing front, in another measure, the government has rolled out the second phase of Pradhan Mantri Awas Yojana – Gramin (PMAY-G) with a target of 1.95 crore homes between 2019-20 to 2021-22 as against 1.54 crore rural houses in the previous five years.

Under the 'Housing For All' by 2022 or Pradhan Mantri Awas Yojana – Urban (PMAY-Urban), "over 81 lakh houses with an investment of about Rs 4.83 lakh crore have been sanctioned of which construction has started in about 47 lakh houses. Over 26 lakh houses have been completed of which nearly 24 lakh houses have been delivered to the beneficiaries," Sitharaman said.

As was the demand to pump in liquidity, the government through the Budget has made the move thereby making the industry players at ease. Srinivasan Gopalan, chief executive officer, Ozone Group said "one lakh crore worth relaxation to the NBFCs is a quick corrective remedy to pump in enough liquidity. The move will help the NBFCs to overcome the current crisis and will bring much-needed relief to the real estate sector as the liquidity crunch issue will be addressed. This will bring more funds into the sector resulting in faster completion and timely delivery of the projects."

However, the government has fallen short of meeting the sector's demand for providing tax benefits for homebuyers outside the affordable housing ambit.

"Pre-budget, there were strong indications that the Centre would create a stress-asset fund to get work started on the stuck projects and provide relief to cash-starved developers as well as aggrieved homebuyers. The fact that it did not materialise is a major disappointment," Anuj Puri, chairman, Anarock Property Consultants said in a statement.

According to him, overall, the budget failed to address the most pressing concerns and, "We may not see consumers and investors return to the market in sufficient numbers, barring in affordable housing."

MANY STEPS TO  CHEAP HOMES

  • Sops to affordable housing segment range from opening up of public sector enterprises and government lands to additional IT exemption for first-time buyers
  • The housing sector had sought opening up of government land banks so that more housing stock can be created on undisputed plots

RENTAL LAWS ARE ARCHAIC

  • Finance Minister Nirmala Sitharaman, in her address, termed existing rental laws as “archaic”
  • “They do not address the relationship between the lessor and lessee realistically and fairly,” she said
  • A model tenancy law will also be finalised and circulated to the states, she said
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