In recent times, the government has been pushing for a slew of reforms to transform the real estate sector and remove many of the hurdles preventing potential investors from purchasing their dream home. With the Union Budget being a major indicator of the investment climate for the entire Financial Year, understandably, expectations were high from the real estate sector. Some of the expectations that homebuyers and developers alike had of the budget was a greater focus on the Housing For All by 2022 initiative, greater tax deductions for home loans and greater budget allocation for infrastructural developments. All of these reforms would play a key role in boosting the real estate sector and improving investments in it.
Did the Union Budget 2019 deliver on these high expectations?
Increased focus on affordable housing
Affordable housing is becoming one of the most important markets for real estate developers. The Budget echoed this sentiment by giving this market a much-needed push. In the new Budget, the tax deduction on the interest payable on home loans has been raised to Rs. 3.5 lakhs. However, this is only applicable for first-time home buyers on a property worth a maximum of Rs. 45 lakhs. Previously, the tax deduction limit on housing loan interest was Rs. 2 lakhs. This move is expected to encourage potential investors to purchase their first home with the help of a home loan in order to reap the huge tax benefits. If you want to avail all above mentioned tax benefits, then Codename Dil Chahta Hai from Shriram Properties’ is the best investment opportunity.
The Budget also highlighted the importance of the PMAY scheme, a landmark initiative to make homeownership accessible to all. Another 19.5 million homes will be allocated under the PMAY-G (Pradhan Mantri Awas Yojana-Gramin). Individuals who meet the eligibility criteria laid out under this scheme will be able to claim it from the period 2021-22.
Proposal of a Model Tenancy Act
With more than 10 million homes lying vacant in India, it’s clear that major reforms are required to attract tenants and help landlords earn a secondary income through rent. The Union Budget addressed this concern with the proposal of a new Model Tenancy Act. This Act aims to protect the interests of both tenants and landlords by offering greater protection measures and easier remedial strategies in case of a dispute. The Model Tenancy Act outlines guidelines for the security deposit amount, squatting, rental increase and more. With the introduction of this Act, landlords are likely to find it easier to find tenants to rent out their property to, while tenants will be more secure in the knowledge that their rights are tightly protected. This is further in line with the government’s focus on making affordable housing accessible to all.
Allocation for infrastructural improvements
Infrastructural development is crucial for the real estate sector to pick up. Enhancing the facilities available and increasing the quality of life in an area has a domino effect on property appreciation. Improvements in connectivity to suburbs, laying of good roads, electricity and water connections and the development of satellite towns encourage more companies to invest in these areas, which in turn leads to a migration of job-seeking individuals, thereby leading to a demand for residential projects in the areas. The Budget announced an allocation of Rs. 100 crores for infrastructural development over the next 5 years. This will undoubtedly act as a catalyst for infrastructural improvements and sustained growth of the real estate sector.
RBI gains control of HFCs
Housing Finance Companies (HFCs), previously under the control of the National Housing Bank (NHB) will now come under the authority of the Reserve Bank of India. This move was announced as a measure to combat the ongoing liquidity crisis that NBFCs in the housing finance sector are facing. With greater access to capital as a result of this measure, NBFCs are likely to resume lending for housing investments. This will increase the flow of investments in the real estate sector and contribute to its growth.
The Union Budget 2019 addressed many of the concerns of home investors and real estate developers. By pushing for accessible housing, regularizing the market and improving access to loans for investments, it promises to improve buyer sentiment and lead to greater investments in the sector. For potential homebuyers, now is the best time to make an investment and take advantage of the tax benefits announced by Budget 2019. If you are planning on purchasing your dream home, look no further than Shriram Properties. Our state-of-the-art homes are set apart by their perfect locations, transparent plans and honest prices.