Mumbai, 17 January 2022: Mr. Sandeep Runwal – President, NAREDCO Maharashtra and Managing Director, Runwal Group
“Real estate being the second-highest employment generator and contributing more than 8 percent to the economy, the expectations from the 2022-23 budget are high and the industry is awaiting big announcements that will alter the future of the real estate sector.
The Central and State governments rolled out several reforms and incentives during the past year to revive the economy from the ill effects of the pandemic.
The Government will continue to put in its sincere efforts in pushing affordable housing. The cap of Rs. 2 lakh per annum against interest rate deduction under section 24(b) of the Act needs to be hiked to at least Rs. 5 lakh along with removing the 45 lakh cap from affordable housing, which will boost the affordable and mid-segment housing in a big way.
We also expect the government to continue promoting the affordable rental housing schemes by announcing tax reliefs for rental housing projects, which will fast track the pace of investments in these schemes. The Government’s commitment to boost both affordable and rental housing will help achieve their overall goal of Housing for All. We expect the Government to introduce tax sops for first-time homebuyers and look forward to re-introducing GST with an input tax credit on under-construction properties that will generate demand among homebuyers. There is a specific need for tax relief to spur significant real estate growth, along with single window clearance and lowering of home loan interest rates that will definitely go a long way in improving the market sentiments. We also urge the Government to reintroduce subvention schemes, helping the homebuyers to align their payments and encourage them to take a decision on home buying.
The quantum of the SWAMIH stress fund needs to be enhanced along with strengthening the financing institutions to generate adequate liquidity and help the completion of stuck realty projects.
In addition, the ‘industry status’ for real estate has been the long-standing demand by the sector; we anticipate that the Government can address this concern too.
Overall, the industry expects the Government to take substantial measures to strengthen the real estate sector as well as the entire economy, by addressing critical issues, ensuring job creation, and sustaining growth.”
“The sector is seeing a strong recovery from the pandemic crisis. Residential sales in the top 8 cities have bounced back to near pre-COVID levels. While the real estate sector is looking at a robust housing demand revival in 2022. The developers expect the Union Budget 2022 to play a supportive and enabling role.
The upcoming budget shall bring a lot of hope to the real estate sector. The budget shall offer the much-needed push to the infrastructural development of the country. Falling housing inventory levels and a much healthier banking system are the perfect platforms for the budget to anchor a strategic roadmap for the next decade.
We should look at a multi-dimensional approach focused on the availability of improved & low-cost credit, forward-looking FDI inflow which allows foreign investment in completed housing, and inclusive participation in the start-up ecosystem through a dedicated fund focused on real estate innovations and digitization could go a long way in making the sector excel in 2022.
The outlook is a positive upsurge because of the strategic decisions and changes that the Government brought into action to tackle the Covid crisis that gave an overall boost to the home buying sentiment especially in these difficult times with the onset of the third wave.
Additionally, developers are hoping for provisions that will benefit the growth that includes the deduction of loss under house property, reduction in the income tax burden on rental housing and long-term capital gains on capital assets, relaxations in provisions for REITs for faster recovery in commercial real estate.
We have also written to the government to urge for a reduction in tax for investments on Real Estate Investment Trusts (REITs) and, also demanded tax-neutral consolidation of businesses through the mergers, in order to help the homebuyers who got trapped in delayed housing projects.”
The year 2021 in many ways was the year of hope and revival whereas 2022 will be the year to sustain the growth momentum. The real estate sector, like others businesses, is looking forward to many positive, innovative and path-breaking announcements in the budget this year.
Expectations from the Union Budget 2022-23:
- Deviation of 20% from circle rates should be extended across the sector and not limited to homes costing upto Rs.2 crores. The same will allow developers to offload the massive build-up of unsold inventory costing more than Rs.2 crores. Currently the major part of the unsold inventory is ready-to-move-in and falls in the luxury category.
- There couldn’t be a more opportune year to accord industry status to the Real Estate sector as a whole; currently the same has been accorded only to affordable housing. This is a long-pending demand and can help developers raise funds at lower costs.
- The government needs to push the well-capitalized NBFCs and banks to extend credit and liquidity to the players in the sector who have good equity left in their stuck projects.
- The government after the decent success of its SWAMIH fund, should announce several more funds that can help target specific real estate verticals that need liquidity support and high capital infusion like township developments and large format business parks.
- Extending no tax upto an income of Rs.10 lacs to all taxpayers for a year to give impetus to demand and consumption.
- The reduced repo rate has helped reduce EMI’s for homebuyers; the government should permit further deductions in the income tax for individuals availing homes to buy affordable and mid-income homes.
- The government should declare tax free, the rent income received from any one owned house across the country. The same will see the young, new age investor pour money in Real Estate.
- The real estate sector contributes the second most to employment in the country and is expected to contribute to the tune of 11% to the nation’s GDP. Keeping the same in mind specific threshold lead incentive for developers should be announced to encourage job creation in the category.
”Amid the pandemic, the Government has recalibrated its approach towards remobilizing the economy and introduced various reforms to ensure adequate liquidity in the system such as keeping the interest rates low, additional liquidity support to NBFC and HFCs. RBI’s accommodative stance for such a long duration too helped mitigate the effects of Covid-19 on businesses and was a key to the recovery of real estate and the overall economy. These reforms have eventually proven to be positive for the economy in the long run. The outlook on India’s economic growth in the coming years looks very positive with the way the Government has tackled the Covid crisis.The upcoming budget needs to be more attractive to foreign investors as it will be an ultimate platform to announce further incentives which will attract more foreign investments into the sector. Considering the rupee’s recent muted performance, this budget is an ideal time for reforms targeted at foreign inflows into India. We expect the government to reduce the tax on interest income which will help accelerate capital inflows to India. Liberalizing foreign investment norms in real estate is another widely expected move.
The residential real estate market in India has become more lucrative for NRIs as a result of the increased transparency due to RERA and ease in investment norms. Given their efforts towards nation building, the NRIs expect the forthcoming Budget to reward them with sops such as ease of compliance under the Income-tax Act and reduction in withholding tax rates, among other relaxations.
Real estate acts as a major growth driver for the Indian economy. The government must announce encouraging moves that can further attract foreign investments into the sector and help in huge employment generation.”
”The real estate sector was already in focus for the government in 2021, we expect a similar and a more refined response this year.The government has already played an immense role in driving the momentum of the industry with various announcements which benefited the developers and homebuyers last year. We have already addressed the positive outcome of the decisions, with a huge hike in sales all across the country.
The budget 2022 will bring further relaxation to the sector if the government plans on further extending the already introduced relaxations.
Additional benefits like GST waiver for under-construction homes hike in Rs 2 lakh tax rebate and incentives for private sector investments in the affordable housing segment; among others can be some of the measures Finance Minister Nirmala Sitharaman should consider in the upcoming Union Budget.”
“The government and the Reserve Bank of India (RBI) have done enough to bail out the real estate sector from depression, as it remains one of the most precise bellwethers of the state of India’s economy. The budget for 2022 will surely bring a positive outlook for the sector and we look forward to further emphasis on tax incentives, GST waivers, and Affordable housing this financial year. A series of key decisions taken by the government recently to revive the realty sector has improved consumer confidence and the impetus given to the residential sector is expected to yield positive results in the near future.”