The last interim budget was welcomed by the real estate sector with great zeal. A plethora of policy changes was announced that changed and redirected the fence-sitters to the sales office, with greater proximity of conversion. Some major turning points were reduction of GST rate from 18 percent to 5 percent on under-construction flats, elimination of tax from the notional income from the second self-occupied residential property and allowance of capital gains exemptions from investment in a second house. These are some of the integral steps that led to the faith of buyers and stakeholders getting reinstated in this sector.
Though the industry-friendly budget was celebrated among the sector, the bubble took no longer to burst. With the advent of Modi 2.0, the slowed down sector which was regaining momentum is in dire need of a revisit to the GST, Real Estate (Regulation and Development) Act (RERA) and related policies. The new government needs to have a fresh approach towards the policies at a macro level and at a larger perspective, the mission of the prime minister to provide housing for all by 2022.
The need of the hour is to improve liquidity which will mobilise sales and bring back the sheen for the real estate sector. Today, there is no dearth of supply, what lacks is the ease of liquidity in the hands of the customers which alters the purchasing power. The ease of liquidity can enable the buyers to make purchases and also support the idea of housing for all, thus making it essential to enhance the liquidity condition of the country. In order to eradicate the liquidity crisis and ensure the smooth development of ongoing projects; the government needs to reinitiate financing facilities to the developers. As an alternative, they can also reconsider lending to the NBFCs as they are the prime source of funding for the developers.
Rationalisation of taxes and premiums is another area of improvement where the stamp duty charges can be included in the GST rate.
Another key area of concern is the affordable housing segment, which envisions the dream of our honourable prime minister to provide housing for all by 2022. The government needs to release public land holdings to facilitate new developments. Though ‘affordable homes’ are available in the periphery of the top cities, the ‘affordability’ factor is still a question. There is space crunch or the prices are sky high in case of availability. To tackle this, the government can introduce housing schemes for the MIG in the urban areas, something on the lines of Pradhan Mantri Awas Yojana.
The industry is gradually moving up the ladder and requires support from the government to keep growing. After celebrating the success of the country's ascension in the ease of doing business ranking, the industry is aiming to hit the slab of a trillion-dollar economy by 2030. To ensure consistency and seamlessness, the government will have to take steps and remove hurdles to fuel growth.
Rajan Bandelkar is the president of NAREDCO Maharashtra.