Provisions that may benefit Home Buyers

By Jay Dee Infra In Home Buying Tips No comments

Provisions that may benefit Home Buyers

Although there are demands each year to reduce interest rates and increase the income tax rebate slab, the major focus has always been on the financial package for the sector.

  • The union budget should address the need to offer financial protection from project delays to home buyers
  • Industry status to sector will enable ease of doing business
  • Affordable homes can be built only if land availability and bank financing is made easy
  • Infrastructure status and priority lending for housing projects is essential for the financial health of sector

Prior to the union budget 2016, an advertising professional in Mumbai, wonders whether the common man matters at all in the real estate ecosystem. “I am reading newspaper reports about the real estate sector demanding so many things from this year’s union budget.

Most of these demands pertain to the sector’s financial health, rather than understanding the market from the homebuyers’ perspective. Neither the government, nor the developers understand what keeps us away from the property market,”

Although there are demands each year to reduce interest rates and increase the income tax rebate slab, yet the major focus has always been on the financial package for the sector and granting of industry status. A tax consultant, maintains that “There is no denying that the infrastructure status and priority lending for housing projects will do a world of good for the financial health of the sector. Similarly, the industry status might prove to be handy, as far as ease of doing business is concerned. However, will these benefits pass on to the end-users? I have my doubts.”

As far as demands are concerned, the sector has failed to get home buyers on board. Even if there are a few rational suggestions, it is seen as another means to extract benefits for the realty fraternity alone.

For example, the industry body NAREDCO, in addition to demanding industry status for real estate, has suggested that government land, wherever available, should be used as equity and government agencies should be encouraged to assemble additional land.

India is short of 18.78 million housing units and 96% of it is in the EWS and LIG categories. The government is targeting to build 2 crore housing units by 2022. All this will be possible, if land availability and bank financing is made easy, it added.

According to Anuj Puri, chairman and country head of JLL India, the union budget should address the need to offer financial protection from project delays to home buyers.

A buyer, who purchases an under-construction property, can only claim tax benefits of Rs 2 lakh after possession, if construction is completed within three years. The benefits reduce to Rs 30,000, if the builder delays construction beyond this and they pay higher interest, he points out.

Moreover, first-time home buyers purchasing properties for self-use, may also have to bear the burden of paying rent.

“Instead of providing tax benefits to home owners post-possession, the union budget should make a provision that allows the same from the time they start paying interest on their housing loans. This will ease their monetary burden considerably and increase the velocity of home loan disbursements,” says Puri.

Similarly, if an under-construction property is purchased from capital gains, its construction must be completed within three years of the sale, to avail exemption, he explains.

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There can be delays in such cases too. These deductions should be brought at par and the construction timeline should be extended from the current three years to five years, he states.

Pro-consumer suggestions that can revive the sector, will also find support among home buyers. More importantly, when builders and buyers are on the same page, vis-à-vis their budget wish-list, it becomes even more difficult for the finance minister to ignore.

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