Budget failed to offer incentives to affordable housing sector

MUMBAI: The Budget has failed to offer any incentives to the affordable housing sector which is already facing risks in form of high costs and low margins, industry leaders said.

"The Budget is disappointing. The affordable housing sector was expecting that the Narendra Modi government, like last time, would extend some support to it and iron out the difficulties.

"Our demand for infrastructure to the affordable housing, home loan interest rate subvention schemes to enable affordability for housing and propel the demand for affordable housing (houses below 80 sqm) has also not been heeded to," Credai national president C Shekar Reddy said.

The low-cost housing sector has been demanding "infrastructure" status so that funding could be made easier with easy role over. Besides, it had also demanded lower interest rates at under 7.5 percent.

"The Budget is positive overall, but we were expecting something specific for real estate, specifically to incentivise affordable housing, to grant infrastructure status to real estate so that long-term institutional funding could be facilitated - there are quite a few points which we would have expected to find in the Budget speech," Hiranandani Group's Niranjan Hiranandani said.

Mayfair Housing's Nayan Shah said neither the government has given any roadmap on how the 'housing for all by 2022' target can be met, nor it announced any reduction in home loan rates, which was critical for buyers waiting for rates to ease to make their buying decisions.

"The government has announced to create 4 crore rural and 2 crore urban houses by 2020, but nothing concrete have been disclosed for the same. There is no disclosure with respect to affordable housing either," HDIL's Hariprakash Pandey said.

Though the industry has welcomed the proposal to rationalise capital gains regime for REITs, it criticised it for increasing service tax to 14 per cent. "We welcome the move REITs, but the hike in service tax to 14 per cent is a big disappointment. This will have a negative ripple effect on the housing sector and hit home buyers," Mayfair's Shah said.

Echoing similar views, Nahar Group's Manju Yagnik said, "We were expecting tax rebate on raw materials and additional exemption of income tax on housing loan, and streamling other taxes including service tax. On the contrary service tax has been increased to 14 per cent."