Real Estate Department Express Disappointment in Union Budget

While some reforms were welcomed by the developers across the country, a majority of them felt let down by the highly-anticipated budget.

Published: 01st March 2015 06:05 AM  |   Last Updated: 01st March 2015 07:59 AM   |  A+A-

HYDERABAD:The real estate industry has expressed disappointment with the Union Budget, which was presented on Saturday, and felt that the Central government has not done enough to achieve their dream of housing for all. While some reforms were welcomed by the developers across the country, a majority of them felt let down by the highly-anticipated budget.

“Since day one, the Modi-led government has been talking of providing housing for all in a big way. However, as far as affordable housing is concerned, the budget is totally disappointing. Everybody was expecting a very big stimulus for affordable housing because the government’s agenda is to provide housing to all by 2022. There is not much time left to complete the task, so developers across the country are disappointed,” said C Sekhar Reddy, president, CREDAI-National.

Apart from failing to meet the expected standards of affordable housing, realtors feel that the government has also failed to deliver on another of its pet projects, ie, smart cities.

“Where are the smart cities? It is the biggest agenda in their manifesto to build smart cities but nothing is mentioned about it except allocation of `22,000 crore. While we welcome steps like interest-free bonds for infrastructure and single-window committee and other reforms, overall, we feel largely let down by the budget,” Reddy said.

Realtors, who were expecting significant stimulus regarding issues like interest subvention, service tax exemption and infrastructure status, rued that there was  nothing in the budget that could inspire confidence among the developers in the industry.  “The real estate sector is largely disappointed with this year’s budget as except for REITs and curbing of benami transactions, there was no specific mention alluding to the sector this time around unlike in the last budget. Further, the increase of nearly 2 per cent in service tax is going to push up the overall cost for buyers and those availing services from the real estate sector,” said Sanjay Dutt, executive managing director (South Asia) of Cushman & Wakefield.

The finance minister has missed an opportunity to use the real estate sector as another trigger for economic growth. Some of the long-pending demands such as removal of DDT and MAT on SEZs, reintroduction of Section 80-IB for low-cost housing and extension of interest subvention for affordable housing have been ignored yet again, he added.

“While the micro and small enterprises are fairly well targeted, there is no coverage or mention of housing finance needs of these categories. While the budget talks of housing for all, how do people in EWS/LIG segments buy or build houses in the absence of access to long-term home loans at very reasonable rates?” asked PN Vasudevan, managing director and founder of Equitas Holdings Private Limited.

“The current refinance norm of National Housing Bank (NHB) prescribes a margin cap of 2.5 per cent between the refinance rate and the borrowing rate of the end consumer. This 2.5 per cent does not even cover the transaction cost, let alone meet the risk and return requirement. The government needs to engage with the housing finance companies (HFCs) to work out the appropriate  margin cap based on real operating costs and risks involved in lending in these segments,” he observed.

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