The landscape created by the Government in the first quarter of the year 2017 can be regarded as a dynamic podium for a large number of aspirant home buyers in India today. Some major reasons for the same which are as follows:
Budget Boost
On February 1, 2017, the Union Finance Minister, Arun Jaitley, announced a number of measures to boost the Indian Real Estate Sector. A true product of razor sharp foresightedness was in granting infrastructure status to affordable housing. In fact, decisions of this sort can be regarded as the Government's aggressiveness to accomplish the most common dream of the Indian Middle Class. Several private developers have already forayed into the market drawing up their plans in the affordable housing segment across top 8 Indian cities and even in the Tier-II, Tier-III cities and beyond. The industry will witness a wide array of affordable housing projects in the coming months across the nation. These projects will be under the umbrella of the new Real Estate laws. As a result, these projects will get completed in a time-bound fashion. Considerable reduction in home loan rates and lucrative schemes rolled out under the PMAY (Pradhan Mantri Awas Yojana) are just the best options for a first time home buyer. Calculation of carpet area instead of built-up area for affordable housing has also thrusted the end-users' sentiments. From the investment point of view, speculative elements have been neutralized and asides end-users, the investors will find significant premium in short term as well as long term real estate investments.
Tax Sops
Reforms in taxation associated with housing sector have been also given the developers extra premium to come up with more and more development. The Finance Minister has announced up to 100 % deduction of profits from tax of an affordable undertaking of carpet area of 30 square metres in four metro cities and up to 60 square metres in other cities for the developers. Then the benefit of greater tax deduction for interest paid on housing loans will also come into effect post April 1, 2017 (start of the new financial year). The move to tax unoccupied houses a year after getting completion certificate would discourage speculative investment in housing and would encourage long term investments, thereby reducing susceptibility to price volatility.
Single Window Clearance
From May 1, 2017, the Real Estate (Regulation and Development) Act, 2016 (RERA) will be operational. As a result, a number of State governments are working towards adopting a single-window clearance for the developers. A full measure of the impact of RERA will be felt in the following three to six months as per experts. Developers, as a result, are actively looking at lowering the ticket size of apartments, by lowering launch prices and apartment sizes. The home loan rates are at their lowest (from some of the banks) now in the last decade for ready-to-move in properties. The holding period of Long Term Capital Gains Tax (LTCG) for land and immovable assets has been relaxed to 2 years; which may lead to greater secondary sales of residential units. The recent restrictions on dealing in cash transactions only upto Rs. 3 lakhs would also help curb the artificial hike in home prices, particularly in the sale of units in the secondary market.
Quicker Approvals
Once the provisions of RERA kick in, efforts will be given to put in place online approval systems for residential projects. As for instance, in cities like Delhi and Mumbai, work is on to give online approval to developers within 60 days of filing the applications.
Apart from that, there are several other linked factors that entice people to purchase their dream home now.
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