#Budget2017: Salaries Fail To Keep Pace With Housing Prices, Home Buyers Demand Rational Sops
Ever since the recession in 2008, salary growth in India has been a meagre 0.2 per cent while China registered 10.6 per cent growth, Indonesia 9.3 per cent and Mexico 8.9 per cent in the same period. Some of the popular job drivers — real estate, information technology, transport, automobiles, gems and jewellery, metals, leather, handloom sector and textiles created 67 per cent lesser jobs overall when compared to 2014.
Therefore, cheaper, more affordable housing will drive growth opening up job prospects for a large section of the population.
Here are the top expectations that home buyers have from Finance Minister Arun Jaitley as he prepares to announce the Union Budget 2017 on February 1:
- Two new income categories can look forward to interest subsidies under Pradhan Mantri Awas Yojana (PMAY) but it is yet to be defined whether it is applicable to the non-EWS (economically weaker section) and non-LIG (low-income group) housing. Furthermore, does it apply to Tier-II and -III cities?
- Borrowers should get deductions from the year of borrowing rather than post-completion. Many home buyers pay a heavy price for project delays. Read more on this here.
- Real Estate Regulatory Authority (RERA) must incentivise timely constructions. Terms and conditions should be defined so that there are no loopholes.
- Home insurance premiums should be made eligible for exemptions. This will help more home buyers secure their homes.
- Even buyers want to understand whether property prices are going to rise further. In this regard, the Budget should provide clarity on the rates applicable on Goods and Services Tax (GST).
- One of the most unpopular clauses is that while one can claim the entire interest amount for pre-construction post completion of construction (in five equal installments), the deduction limit is a mere Rs 30,000 per year if the construction goes on beyond three years. It has often been a harrying situation for many. The amount should be more rational.
- First-time home buyers could claim an extra deduction of Rs 50,000 if the loan amount does not exceed Rs 35 lakh and the cost of the property was under Rs 50 lakh. While the amount was attractive, the clause of the property being priced affordably hindered the chance for many to avail this offer. This budget season would need to be more people-centric.
- If going digital is the mantra, all land records and information about authorised and unauthorised constructions should be made available to all. Funds should be allocated to ascertain that digitised records are made.
- While RERA will make home buying a simpler task, efforts should be made to grant real estate an ‘industry’ status. The benefits of becoming an ‘industry’ should then be passed on to home buyers in the form of transparency, speedy constructions etc.