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Real Estate Meeting: An Open Letter to The Honourable Finance Minister of India

Real Estate Meeting: An Open Letter to The Honourable Finance Minister of India

Real Estate Meeting: An Open Letter to The Honourable Finance Minister of India
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By Manisha Natarajan  Jul 19, 2018 10:11:32 AM IST (Updated)

Union Finance Minister Piyush Goyal will hold a top-level meeting on Thursday with an aim to accelerate the growth of real estate sector.

Dear Sir,

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You’ve called for a three hour marathon meeting today, with the agenda of boosting the Real Estate Sector. I’m guessing, the purpose is more like finding urgent oxygen for a sector gasping for air! And I’m speaking strictly of India’s housing market which unfortunately constitutes almost 80 percent of Real Estate. That’s the one in limbo and struggling.
The constitution of your invitees – two Apex Housing Banks – NHB and Hudco along with a clutch of bankers both public and private gives us a glimpse of what will rule the agenda – The paucity of fund flow and credit to the housing sector. While that critical mouth to mouth resuscitation is definitely high on priority, may I suggest 4 humble issues which you could perhaps discuss, now that you have both the industry heavyweight bodies – CREDAI and Naredco there as well.
Sir, there is no way the housing sector will win back the buyer confidence without the resolution of the 1.5 lakh plus stuck home buyers between JP Infra, Unitech, Lavasa, Amprapali , 3Cs, BPTP and several more. Most of these buyers are reeling under the double whammy of EMI and rents. Their numbers may not be large, but they are the educated middle class, with a large and anguished voice share when it comes to unsettling sentiments. These are the home buyers stuck with no homes for almost a decade, sick and tired of being tossed between the courts, insolvency proceedings and hair-brained revival schemes constantly bleated by the cheating promoters, some of who are in jail.
You have very kindly invited the NBCC chairperson in your meeting today. There is absolutely no reason why NBCC cannot take over these stuck projects and a special fund be created by the Government of India to complete them. There are enough land parcels in most of these builder books, plus extra FSI which the State Governments can be kind enough to release at no extra cost, all of which can be monetized by NBCC to return a fair part of the money back to the special situation fund.
Sir, these home buyers belong to the most important minority group of our country, the honest tax payers, so why not bail them out? And return the home buyer confidence, the most desperate oxygen needed.
2) The second plea for you to consider in your meeting Sir – your government has given the country a fantastic legislation with RERA. But the implementation is both diluted and patchy. Why so? There are 21 States with your government at the helm. Why can you not whip them into shape? The man who has shown the way on RERA implementation – Shri Gautam Chatterjee is with you in the meeting today. I’m sure if he can get 80 percent plus of Maharashtra’s under-construction projects RERA registered, he can now be brought in at the Centre with just one purpose – to get all States to comply with RERA rules in spirit, before May 2019.
3) Sir, now the matter of affordable housing. A large reason why India’s housing sector is gasping for breath is because the industry has built homes at prices which don’t have takers. But the participants are coming around, and are willing to build affordable homes. But where can they? Only at the outskirts of cities where land prices allow them to but takes a commuter 2-4 hours to reach his place of work. Be it the State Government or Private Developers, there is urgent need to build homes at prices between Rs.10- 25 lakh, in the heart of India’s top 8 cities. Or else, they won’t sell. Instead what we will get is urban villages, unstable structures made by unscrupulous builders on Lal Dora sort of land, which fall through the cracks of any regulator be it RERA or Greater Noida Authority. Imagine the constant fear which the families living in declared dilapidated building of Mumbai go through every monsoon, not knowing when their shaky roof will collapse. Yet they are unwilling to vacate them.
Sir, please get the land released – the Railway land, the PSU land, the State government land parcels to create a real affordable housing stock in the country, with proper planned civic amenities to ensure there is real housing demand and our cities don’t become a bigger mess.
4) Yes the housing sector needs more fund flow, especially now that the 12 percent GST on under-construction flats is driving the home buyer to buy mostly ready flats. This has practically squeezed out the free source of working capital for builders – the home buyers money. So perhaps the GST plea that the industry bodies will present to you is worth considering. As are the multiplicity of taxes which are levied by local authorities, state bodies on the housing sector. Or for that matter, the taxing of notional rental income on empty flats. Those are no longer a hoarded product Sir. They are simply not selling. But that I leave it to your able wisdom.
What my final and humble request is – please do something about real job creation. After all, you can’t simply wish for robust demand for housing to return, unless our lakhs of graduating youngsters find jobs, matching their skills and are confident of a bright future.
Yours Truly,
A passionate believer of India’s real estate potential.
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