Union Budget 2017: Budget to provide ample push for affordable housing, say experts

Mumbai: Hailing the government's decision to grant infrastructure status to affordable housing segment, experts believe it will provide ample push for the sector as developers will now be able to get access to preferential and lower borrowing rates from banks.

"We must appreciate the fact that the government is very serious on the mission of housing for all and in the same light we have seen some extremely positive announcements in the budget today. Affordable housing getting infrastructure status will enable efficient supply of housing stock in the country and provide benefits associated with it," CREDAI national president Getamber Anand said.

Additional refinance of Rs 20,000 crore from National Housing Bank and lower interest rates resulting from increased liquidity in the banking sector would add to the funds for the sector at lower costs to the ultimate consumer, he said.

PropEquity CEO and Founder Samir Jasuja said, "One of the key demand of the real estate sector has been to get industry status to get preferential and lower borrowing rates from banks. This announcement will surely provide ample push for the affordable housing sector in India, a key initiative under housing for all."

Finance Minister Arun Jaitley has also announced new credit-linked subsidy scheme for middle income group with allocation of Rs 1,000 crore in the Union Budget for 2017-18. Long term capital gains tax benefits on housing which could be availed after 3 years, has been brought down to 2 years.

Commenting on the Budget, Tata Housing Managing Director and CEO Brotin Banerjee said, "Easy and dedicated access to institutional financing, higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing in India, making it the core driving segment for real estate."

"On the other hand, long term financing at lower rates will reduce costs of construction for developers allowing them to pass on benefits to consumers. The new status will increase the resource allocation for the sector, catalysing housing supply and reducing the supply gap," he said.

CBRE Chairman India and South East Asia Anshuman Magazine said, "While we are yet to read the fine print, this is indeed an important step to promote access to priority lending, thereby spurring supply of low cost housing units across various cities in India. Relaxation in area measurement as well as completion timelines to seek tax exemption are welcome steps."

Further, the government has also increased allocation under Pradhan Mantri Awas Yojna (PMYA). This will encourage home buyers and further boost participation from private players, he said.

"This move will significantly reduce the capital gain tax liability while encouraging the mobility of assets. We also plan to extend the basket of financial instruments in which the capital gains can be invested without payment of tax," Jaitley said.

For Joint Development Agreement signed for development of property, he said the liability to pay capital gain tax will arise in the year the project is completed.

Stating that the new capital for Andhra Pradesh is being constructed by land-pooling mechanism without use of the Land Acquisition Act, Jaitley proposed to exempt from capital gain tax, persons holding land on June 2, 2014, the date on which the state was reorganised, and whose land is being pooled for creation of capital city under the government scheme.