Budget 2019 Gives A Boost To PMAY Beneficiaries While Sector Awaits Industry Status
Stakeholders were eagerly waiting for finance minister Nirmala Sitharaman to usher in a new wave of growth by confirming industry status for the sector, as she presented her maiden budget on July 5, 2019. While the industry status and single-window clearances were missed out completely, the sector still has reasons to cheer, thanks to various sops announced in favour of middle-class homebuyers.
Heavy gains for affordable housing and buyers
“An additional income tax deduction of Rs 1.5 lakhs on interest paid on affordable home loans, for homes valued up to Rs 45 lakhs, is an encouraging step and we hope this is extended to support the household buyers in the subsequent years also. We remain bullish on the sector,” states Gaurav Kashyap, CEO Cherry Hill Interiors Pvt Ltd. In a market where everyone is seeking an affordable home, Atul Banshal, CFO, Experion Developers feels that every potential buyer should be extended this benefit. “Giving additional interest benefit of Rs1.5 lakhs for affordable housing units priced up to Rs 45 lakhs, is insufficient and should be extended to all property buyers. It will boost the demand in the market and will encourage people to buy self-occupied houses and inch towards the ‘Housing For All’ vision,” points out Banshal.
Affordable homes and the government’s ambitious PMAY scheme did find a sizeable mention in Budget 2019. Developers are expecting volume of sales to grow massively. Ashok Mohanani, chairman, EKTA World and vice-president, NAREDCO Maharashtra, says, “The housing deficit, especially for the LIG and MIG sector, has been a matter of concern and the proposal for constructing 1.95 crore houses under PMAY Grameen, will help address the same. The overall sentiment will get a boost and there will be a cheer in the market as the budget has announced a further reduction in interest rates. We are expecting a fresh influx of demand and an exponential rise in sales this year.”
The rental housing policy also found a mention and while the developer fraternity has welcomed it, most are still waiting for the proposed Model Tenancy Act to lay down stable rules for home owners and tenants in the country.
Infrastructure attracts funds
Major emphasis has been laid on infrastructure development, with the proposal of Rs 100 lakh crores of investment for the infrastructure sector in the next five years. Parveen Jain, vice- chairman NAREDCO, and CMD Tulip Infratech believes that all these initiatives will be good for the growth of the economy. Also, investment of Rs 80,250 crores in the upgradation of roads is a much-needed move and will help in improving the infrastructure of the country, confirms Mohanani.
Change of guard from NHB to RBI
“While the RBI may not have directly regulated HFCs earlier, banks contribute 58 per cent of housing finance (HFCs) originations anyway. So, uniform sectoral regulation can have benefits,” says Mahesh Misra, CEO, India Mortgage Guarantee Corporation. He goes on to add that smooth operational transition will be key, given that several HFCs are newly incorporated and any slippages in an already tight environment could prove adverse. It is imperative for the housing sector to revive so that the economy can witness desired traction. The NHB will continue to play a vital promotional role in that revival, Misra believes.
Kaushal Jain, MD, Arihant Group, says that it would have been apt if GST would have been revised for construction materials such as cement to make them more affordable. With single-window clearances still being a distant dream, Rajat Goel, JMD, MRG World believes that it is time that the sector had time-bound approvals related to projects.
As for tax sops for home buyers, Harinder Singh Hora, MD, Reach Group says that even though RBI’s rate cuts were announced, the benefit was not extended to buyers. “It is paramount that banks should pass-on the interest rates to consumers to get the sector back on a fast track,” Hora states.
While start-ups received a prominent spot in the budget, co-working space providers are still concerned that Budget 2019 has not given provided any relief with respect to GST.