A mixed bag of reactions by real estate sector on full Union Budget 2019-20
Presented by the maiden budget by Finance Minister Nirmala Sitharaman, the full Union Budget 2019-20 has much to offer to the real estate. From lending a stronger back to the housing sector.
Additional deduction of up to Rs 1,50,000 along with the existing interest deduction of Rs 2 lakh on interest paid on home loans borrowed up to March 31, 2020 for purchase of an affordable home valued up to Rs 45 lakh will boost the affordable housing.
In a move to promote rental housing, the Finance Minister said several reform measures would be taken up to promote rental housing. The current rental laws are archaic as they do not address the relationship between the lessor and the lessee realistically and fairly. A Model Tenancy Law will be finalised and circulated to the states soon.
Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI
Union Budget 2019-20 in terms of real estate has been heartening where CREDAI’s long standing proposals to reform archaic rental laws and promote public housing on government land figure have been among the immediate policy agenda outlined by Finance Minister. With regulation of Housing Finance Companies returned from NHB to RBI, we hope that Reserve Bank of India would bring about much needed reforms for financing of real estate sector such as land, giving priority sector status to housing finance and lower cost of funding. Moreover, an additional deduction of Rs 1.5 lakh on interest on loans borrowed under affordable housing scheme has been announced, which means those purchasing affordable house will get tax relief up to Rs 3.5 lakh on interest paid.
Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development
The full Union Budget 2019 -20, presented by honourable Finance Minister Nirmala Sitharaman announces to continue its consistent approach towards affordable housing with more focus on increasing the carpet area, re-defining income criteria and giving infrastructure status under the Pradhan Mantri Awas Yojana. With its commitment towards affordable housing, the government aims to increase the number of beneficiaries in terms of the credit-linked subsidy scheme (CLSS). Moreover, the number of days in constructing the house have been reduced to 114 from 314 in 2015-16 and this only with the use of DBT platform and technology. An additional deduction of Rs 1,50,000 on interest on loans borrowed under affordable housing until 2020 and allocation of Rs 100 lakh crore investment for infrastructure over 5 years ensures to further boost the sector.”
Amit Modi, Director, ABA Corp and President (Elect), CREDAI Western UP
While we appreciate that this Union Budget has empathised on affordable housing and Pradhan Mantri Awas Yojna with its proposal of 1.95 crore houses under PMAY (Grameen) by 2021 and over 80 lakh houses have been sanctioned under PMAY (Urban), in addition to tax benefits of additional deduction of Rs 1.5 lakh to those purchasing affordable house, finally getting a tax relief up to Rs 3.5 lakh on interest paid, but at some time we feel that the government has missed the bus when it comes to millions and millions of first time middle class buyers who were looking forward to this budget before their first real estate purchase, the fact is that even a small 1-2bhk Apartment in Tier-1 Metro cities like Delhi, Mumbai and Bangalore will cost starting Rs 50 lakhs and above and these urban buyers looking at ease of living in cities have been completely ignored in the process.
Also the legitimate sector concerns including Industry Status for Real Estate Sector and Online Single Window clearance have been missed out in this budget, as we feel that these steps in particular would have made a huge difference in transparency and turnaround time in delivery of housing to the masses across the country, while contributing towards the goal of Housing for All 2022.
Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/PropTiger.com
The standout announcement in Union Budget 2019, for the real estate sector, was the additional deduction of Rs 1.5 lakhs for those seeking home loans for affordable housing projects, which will be allowed till March 31, 2020. The FM mentioned that this takes the deduction up to Rs 3.5 lakhs cumulatively and translates into a gain of Rs 7 lakhs, during a 15-year loan repayment tenure. This boost on the demand side was clearly needed considering that many home buyers have turned fence-sitters, awaiting such tax sops or correction in prices. On the supply side, over 81 lakh houses have been sanctioned, out of which construction has been completed for 26 lakh houses under the PMAY Urban scheme and this too, shall continue to boost the market for affordable homes.
While it may seem like that there haven’t been any direct announcements to benefit the sector, the real story lies in the fine print. All the initiatives spoken of, to improve road, suburban railways and Metro connectivity; create a robust water management system; work on the Ease of Living; invest Rs 100 lakh crores in infrastructure over the next 5 years, will create more liveable cities and encourage people to invest in projects, even in peripheral areas and not overcrowd the CBDs and SBDs. On the regulatory side, we see the move to hand over regulation of housing finance companies to RBI, as a positive one. Reduction in NPAs of commercial banks by over Rs 1 lakh crores over the last year, is an encouraging sign for the sector that has been hit hard by the funding crisis. Another major area that has been addressed is Rental Housing – we look forward to the Model Tenancy Law that has been promised, to do away with the current archaic laws. The government’s clear focus on continuing to attract global investors into various sectors bodes well for the economy at large.
We are also very enthused about the government’s vision to train 10 million youth to take up industry oriented training and acquire various skillsets in AI, big data, VR, 3-D printing, etc. For a sector that has been grappling with the lack of a trained workforce, the importance of a skilled, employable workforce, can’t be emphasised enough.
Uddhav Poddar, Director & CEO, Bhumika Group
The 1st budget of Modi 2.0 Government has been quite positive, where the government has proposed to invest 100 lakh crore for infrastructure over 5 years. This investment in infrastructure development is the urgent need, especially for tier II & tier III cities and such a significant investment is really applaudable, as this will speed-up the development in these cities. In addition the additional deduction Rs 1.5 lakh on interest on loans will definitely be a big driver for real estate, and will attract home buyers back to the real estate market. And lastly the reduction in corporate tax with turnover of up to Rs 400 crore slashed to 25 per cent from a current rate of 30 per cent – this covers nearly 99% of the companies in India is again a laudable decision.
Ashish Bhutani, CEO, Bhutani Infra
Union Budget 2019-20 in terms of real estate announces to continue its consistent approach towards affordable housing. Under 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 and 1.95 crore houses have been proposed to be provided under PMAY Grameen by 2021. Moreover, an additional deduction of Rs 1.5 lakh on interest on loans borrowed under affordable housing scheme has been announced, which means those purchasing affordable house will get tax relief up to Rs 3.5 lakh on interest paid. However, with budget only catering to low cost housing, the middle class housing segment has been left completely ignorant. We expected the government to meet our long awaited demand of Single Window Clearance & Industry Status so as to smoothen the process under real estate.
Prateek Mittal, Executive Director, Sushma Group
Just like interim budget, the government in this budget also has stressed on boosting the housing segment of real estate industry by extending additional deduction of Rs 1.50 lakh on interest on loans borrowed under affordable housing. It will help millions of Indian to realize their dream of having their own house. Also, giving regulation of housing finance companies to RBI will result in improved regulations.
But, as a developer we had certain expectations from the government for this budget which have not been fulfilled which includes our demand for Industry status, single window clearance and reinstatement of Input Tax Credit in GST.
Dhiraj Jain, Director, Mahagun Group
The sector sees a ray of hope in the focus on affordable housing. The seriousness is visible as in this Budget the FM has proposed to provide nearly 1.95 crore houses under the PMAY. The target definitely is Housing for All by 2022 and it seems possible as now it takes only 114 days to complete the houses. We hope that further steps will follow that will augment this wish. The sector will also benefit from the road development that is proposed in the budget. Upgradation of roads will mean more projects near such areas leading to further growth of the sector.
Deepak Kapoor, Director, Gulshan Homz
We were expecting few things but then last time government gave a lot of things to streamline real estate. HFCs coming under RBI will also help in streamlining the financial situation. It could have been better if something should have been given to the middle class that comprises the majority of home seekers. As of now we can only expect something better in future.
Amit Raheja, CMD, Wealth Clinic
In terms of Real Estate and Housing the move towards improving the Current rental laws is a positive move. The need for such a reform is immediate, as the current mandate in rental is still unstable. Post the Infrastructure status designated to the affordable housing in the previous budget and now under 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. Additional deduction Rs 1.5 lakh on interest on loans will boost the buyer’s sentiment.
Ashok Gupta, CMD, Ajnara India
The Budget is not very different from the interim Budget , the focushas been to boost infrastructure as well as affordable housing. The positive step towards under 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. Additional deduction Rs 1.5 lakh on home loans would help homebuyers to fulfil their dreams of owning a home. At the same time we would have preferred a Single Window clearance for all Real Estate Projects just like the ones extended for Movie Industry.
L.C Mittal, Director, Motia Group
In this budget the government has undertaken measures to provide impetus to the affordable segment of the society to realize its target to achieve housing for all by 2022 under Pradhan Mantri Awas Yojana but have not taken any major steps to incentivize the real estate sector and to aid the developers and upper and upper middle class segment of the economy.
However, in this budget we expected the government to consider our long stalled demand of Industry Status for real estate sector but that has not been fulfilled this time also.
Parveen Aggarwal, Founder and Chairman, Signature Sattva
The Union Budget 2019 – 20 aims to achieve Housing For All -2022. The infrastructure status tag had already been given to the affordable housing in the previous budget and now under 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. Additional deduction of Rs. 1.50 lakh on interest paid for house purchase from Rs. 2 lakh ensures to push the growth of affordable housing thus giving relief to buyers buying houses under this segment.
Pankaj Jain, Managing Director, Realistic Realtors
Financially sound NBFCs will continue getting funds, this looks like a positive step that can solve the financial crunch in real estate sector. Another take from this budget is the allocation for upgradation of infrastructure, roads and Metro Rail initiatives to be enhanced by encouraging PPPs and faster completion. Any infrastructural development boosts the movement of real estate and encourages investments. However, the sector was expecting few other things that could have augmented the steps taken previously by the government to regularise the sector. We still hope that some good announcements will follow soon.
Vaibhav Jain, CMD, Rise Group
After a pre-election populous Budget in February, Modi government today presented the Union Budget to boost infrastructure as well as affordable housing with major announcements made towards these segments. Additional 1.5 lakh tax relief on home loans would help homebuyers to fulfil their dreams of owning a home. However, developers were expecting Industry status for the real estate sector and single window clearance system, which aren’t addressed in the budget 2019. But overall, we are hoping that the sector would run on revival path and cheer the investors as well as developers in the sector.
Kaushal Jain, Director, Arihant Group
With India set to become a $3 trillion economy this year, the first Union Budget by the Modi 2.0 focus remains on Affordable Housing. Under Pradhan Mantri Awas Yojna over 80 lakh houses have been sanctioned and 1.95 crore houses proposed to be provided under PMAY Grameen by 2021 is a very positive move and will boost the affordable housing sector.
Rajat Goel, Joint Managing Director, MRG World
Budget 2019-20 has given impetus to affordable housing. It aims to increase the number of beneficiaries in terms of the credit-linked subsidy scheme (CLSS).Moreover, due to the use of DBT Platform and technology, the government has announced to reduce the time taken for construction of houses 31 days to 114 days. The proposal by the government to invest Rs 100 lakh crore for infrastructure over 5 years aims to give a boom to the real estate sector.
Vikas Bhasin, CMD, Saya Group
The proposal by the government in the union budget to invest Rs 100 lakh crore for infrastructure over 5 years gives us an assurance that the real estate sector will receive the required impetus. In the budget, the government has continued its thrust for affordable housing and has benefited the lower and lower middle class segment of the society the most. Now the buyer buying an affordable home will get a relief of 3.5 lakh on interest paid will result in enhanced buying and realization of dream of owning a house.
Anupam Gupta, Director, Sales & Marketing, GBP Group
In the Union budget, the proposal by the government to invest Rs 100 lakh crore for infrastructure over 5 years will certainly boom to the real estate sector. With additional deduction of Rs 1.5 lakh on interest on loans the buyers buying house under affordable segment will now get a tax relief up to Rs 3.5 lakh on interest paid. This will help the buyers to fulfill their cherished dream of having a house.
Dhiraj Bora, Head Corp Comm, Paramount Group
The budget appeared to be a cautious effort by the government. There was nothing much to cheer about by the real estate sector. We expected a few announcements especially the ones that will help in faster completion of projects and better funding options for the developer. Though government has put emphasis on affordable housing but it did not touch upon the issue of input tax credit that will help in keeping the prices in check.
