Realtors reaction on Union Budget 2012-13

By Accommodation Times Bureau

Disappointing Budget, says CREDAI President Lalit Kumar Jain

It is a highly disappointing budget, said Mr Lalit Kumar Jain, National President of CREDAI (Confederation of Real Estate Developers’ Associations of India).
The Finance Minister has miserably failed in highlighting the importance the role of Housing in economy, employment generation, apart from the very need of housing. “The announcements on ECB for affordable housing is a minor respite but still meaningless,” Mr Jain, who is also CMD of Mumbai-Pune realty developer Kumar Urban development Limited (KUL), said.
The industry, he said expected a big boost from the budget for affordable housing through special schemes, an interest subvention of 5 to 7% for LIG and EWS housing and promotion of rental housing through tax exemption. But it is said that none of these measures were taken note of.
He lamented at the Finance Minister’s neglect of real estate sector despite its contribution of 6.5% to the GDP.
He pointed out that the interest subsidy on home loans is not enough and cannot help either the EWS (Economically Weaker Sections) of the LIG segment.
In view of absence of any clear cut steps addressing the realty sector, he expressed the fear that the cost of housing will go up. Real Estate sector also faces a grave risk of drying up of liquidity and here again the Finance Minister has not done anything thing to mitigate the crisis.
Mr. Jain felt that the exemption of capital gains tax to invest in SME may result in cash flows out of real estate.
“We definitely expected huge impetus to affordable housing sector which is a dire need from the government’s own sated objective of providing shelter for all and as a measure to boost the economy,” he added.

Mixed Bag for the real estate sector
Mr. Brotin Banerjee, MD & CEO, Tata Housing
“The Union Budget 2012-13 throws up a mixed bag for the real estate sector. The Government’s initiative to make affordable housing available to a larger section of the society has only been met partially. Initiatives such as External commercial borrowing for the affordable and low-cost housing segment will help the sector to tap long-term fundsand help ease the liquidity in the sector. Extension of the 1% interest subvention scheme for affordable housing will help the buyers to avail a loan limit of Rs.25 lakh. Also the measures to increase funding for highways and other infrastructure will help put more territories on the real estate map.
However, the demand of increase in the limit on tax deduction available on home loans interest from current Rs 1.5 lakh remains unanswered. The Union budget has no real measure for the real estate sector as most of the industry expectations have not been met. The most important demand across all real estate companies that of an industry status being assigned to the sector has been long pending as well.”

Mr. Neeraj Gulati, MD, Assotech Realty
By providing external commercial borrowings (ECB) for low cost affordable housing projects, it has helped to lower interest cost for developers. But, we were expecting the budget to be more fruitful for the Real Estate sector. It has ignored various important issues, leading to unfulfilled expectations.
Unfavorable aspects:
•Last year, a 1% interest rate subsidy was provided for loans towards affordable housing. Realty sector wanted the scope of this subsidy to be amplified and broadened to include a wider price band of budget housing to benefit home buyers, especially in lower income groups. There has been no development on this.
•There is no legislation on Real Estate Investment Fund (REIT)
•No implementation of revised DTC to provide the required clarity on the issues that may emerge, and how businesses would be promoted in SEZs.
•No development of Real Estate regulator to ensure transparency and fair play to create a sense of trust amongst the consumers
•No relaxed norms for repatriation of FDI in real estate to make the market more investment friendly

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