Budget 2024: Increasing cap of affordable housing, boosting investments part of real estate sector’s expectations
Interim Budget 2024: Affordable housing, investments in the real estate sector and home loan tax rebates are some of the key expectations of the housing sector for the upcoming Interim Budget 2024.
Co-founder and Chief Business Officer of NoBroker.com, Saurabh Garg, said that the upcoming budget should focus on increasing the cap on affordable housing from Rs 45 lakh to Rs 65 lakh, which would enable more people to reap the benefits of the incentives for affordable housing.
Meanwhile, Payal Thaker, Partner, Indirect Tax, BDO India said, “Affordable residential apartment meaning should be defined based on the carpet area of the apartment and not on the gross amount charged, since in metro cities, the value of apartments can be significantly higher due to high land costs.”
Reiterating the same, Anuj Puri, Chairman of ANAROCK Group said that affordable housing is defined by the government “as a house or apartment valued up to Rs 45 lakh, with a carpet area of up to 90 square metres, located in non-metropolitan cities and villages, and 60 square metres in large cities”. However the central bank defines it based on the loans banks provide to individuals. “The government needs to take a hard look at adjusting the qualifying cost of properties within cities’ affordable housing segment. Although the units’ defined size of 60 square metres is reasonable, the prices of up to Rs 45 lakh make them unaffordable to a huge share of the target clientele.”
“For example, a budget of less than Rs 45 lakh is irrelevant for a metropolis like Mumbai; it should be increased to at least Rs 85 lakh. The budget should be raised to at least Rs 60–65 lakh for other large cities. With this price adjustment, more homes will be within the reach of more buyers, who will be able to take advantage of other government subsidies,” he said.
Puri highlighted that affordable housing has been affected severely due to the COVID pandemic. “ANAROCK Research finds that the previously much-touted budget homes category saw a decline in overall sales – to approximately 20 per cent in 2023 from over 30 per cent in 2022, and nearly 40 per cent in the period before the pandemic,” said Puri.
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“Several interest stimulants that were offered to developers and consumers in this market over the years have expired in the last one to two years. It is imperative to revive and extend significant benefits, such as tax breaks, to encourage developers to construct more affordable housing and to make it possible for customers to acquire such homes,” said Puri.
Garg further highlighted the need to boost investments in the sector. “It would be great if the budget addresses certain areas which in turn can boost more investment in the real estate sector. There is a pressing need for revision in the long-term capital gains tax on property. Reducing it from the existing 20 to 10 per cent can foster increased investment in the property market. Furthermore, it would be good if the budget sanctions a simpler structure in order to streamline processes and enhance the attractiveness of REITs as an investment avenue,” he said.
Puri, meanwhile, added that it is necessary to increase Section 24 of the Income Tax Act’s Rs 2 lakh tax rebate on home loan interest rates to at least Rs 5 lakh. “Doing so could stimulate a more robust market for housing, particularly in the budget homes segment, which has seen a decline in demand since the pandemic,” he said.
Thaker further stated that developers should be allowed to choose between the payment of GST at a concessional rate without input tax credit (ITC) or payment of GST at higher tax rate and availing ITC for residential projects. She urged the government for a clarification that various transfers of land-related rights including lease-hold rights, development rights etc are outside the purview of GST.
Anuj Munot, CEO and founder of UrbanWrk also batted for measures promoting affordable housing, along with incentives for sustainable and eco-friendly construction, simplification of regulatory processes, establishment of a single-window clearance system, and initiatives to boost infrastructure development.
Munot highlighted that tax reforms and financial support to first time homebuyers could enhance the overall stability and growth of the real estate market. He also said that the sector is looking forward to policy measures for lower GST and TDS.
Puri additionally suggested releasing certain government lands held by Indian Railways, Port Trusts, Department of Heavy Industries at a low cost specifically for affordable housing, which will significantly lower real estate prices overall.
The Budget 2024 will be presented by Finance Minister Nirmala Sitharaman on February 1. It will be her sixth budget presentation.
