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Tata Capital > Blog > Loan for Home > How has Budget been Beneficial to Developers and Home Buyers?

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How has Budget been Beneficial to Developers and Home Buyers?

How has Budget been Beneficial to Developers and Home Buyers?

The Union Budget, 2017 has opened gates to affordable housing in the country as is considered to be a win-win situation for both developers and buyers. Affordable housing has been now given the infrastructure status. This move will act as a catalyst to government’s motto oh housing to all by 2022. Another welcome step by the Finance Minister is the abolition of the Foreign Investment Promotion Board (FIPB) which will provide the much-required impetus to the FDI inflows across industries. Let us have a look on the key effects of the Union Budget on the Real Estate Industry in India-

For Developers and Builders

With budget housing becoming more affordable, developers and builders can now focus on the construction of budget project where maximum demand exists. Statistics say that there is a total shortage of 1.87 crore houses in the country, whereas 95 percent shortage of homes is there in the affordable section. With the newly granted infrastructure status, developers will have access to cheaper sources of funds. The refinancing of NHB and tax benefits coupled with other benefits are set to play key roles in bringing an additional supply of money to the sector. The National Housing Board is set to refinance INR 20,000 crore loans. Overall, good times have come in reality for the developers and builders who were considered to be worst hit by the demonetization policy just a couple of months ago. Also, developers and builders will be entitled to avail tax relief on an unsold lot.

For Buyers

The budget, this year is no less attractive for the end user of the real estate industry- the consumer. The income tax rate for the individuals whose annual income ranges between 2.5 lacs to 5 lacs has been reduced to 5 percent. This step will help the taxpayers of other categories as well to save INR 12500. The emphasis on affordable housing will enable the accomplishment of common man’s dream of owning his/ her house. After demonetization, the Reserve Bank of India has slashed down interest rate which has resulted in discounted property loan interest rates. This has taken place due to the surplus liquidity created by the demonetization policy. However, there is further a chance of decreasing housing loan rates if the NHB refinancing comes in the form of subsidy. It can push the home loan rates to go down by 200 to 300 points. If this is achieved, there will be a dramatic rise in consumer’s demand for houses.

For Government

The Central Government in its Union Budget, 2017 has announced to build 1 crore rural houses by the year 2019. Allocation of funds to Pradhan Mantri Gramin Awas Yojana has to be raised to INR 23, 000 crores. It was INR 15,000 crore in the year 2016- 17. Serious efforts have been planned to achieve government’s motto of Housing for All by 2022. Focused emphasis on the real estate sector will result in more employment opportunities in the sector. Though the demonetization policy was considered to be a setback for the industry; it has resulted in the revival of the primary and genuine players in the market. Now, holding period for capital gain tax for immovable properties has been reduced from three years to two years. Also, the window for availing 3 years profit linked incentives for startups has been increased from 5 years to 7 years.

In a nutshell, the Union Budget of 2017 has promised to deliver many positives to the real estate industry. The Government is determined to achieve its objective of Hosing for All by 2022.