CREDAI Chairman showcases the government measures to be a set of a disappointment for the growth of the real estate industry.

By Abhay Shah, Realty Quarter

India’s apex realtors group has been disappointed with the government’s support measures to the industry since it has been unsuccessful on important requirements for house buyers and builders such as tax rebates and reduced interest rates.

According to Jaxay Shah, CREDAI’s National Chairman, the Fund established to complete the stalled estate projects will have little impact, as it excludes those projects which are either in the face of insolvency proceedings or are in non-performing assets (NPAs).

“We met the Finance Minister last month and created several demands for liquidity and demand boosting in the real estate sector, but our demands were sadly not fulfilled,” Shah said Sunday to PTI.

Reiterating the association’s demand for approximately 12,000 members, Shah said the government should revoke its decision of prohibition of the subsidy scheme as it was in favour of home buyers and helped to produce demand.

In July the National Housing Bank (NHB) asked housing finance companies (HFCs) to “do not” grant subsidy loans whereby developers pay interest on home loans on behalf of the home buyers until the buyer gets the possession of flats.

In response to the additional deduction of Rs 1.5 lakh on home loans, the Chairman of Credai said the government must remove the unit price cap of Rs 45 lakh.

In this year’s budget, the government allowed an additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed for the purchase of an affordable house valued up to Rs 45 lakh until March 31, 2020. This additional deduction was already allowed under the Income Tax Law above and beyond Rs 2 lakh.

Shah said the interest rate on affordable housing should be reduced for both house buyers and builders, and the need to lower capital gain tax should also be stressed.

Finance Minister Nirmala Sitharaman announced on Saturday that a special window will be drawn up by the government to provide last-mile funding for non-NPA and non-NCLT housing projects in the affordable and middle-income bracket. In the fund, the central government will contribute Rs 10,000 crore and approximately the same amount will come from outside investors.

External commercial borrowing (ECB) standards for affordable housing have been loosened and house building advance at reduced interest rates will be given to the government employee.

“With the recent announcement, the government has just scratched the surface tip. They don’t realize the gravity of the scenario,” Shah said after the package was announced on Saturday. He said industry expects more from the government to increase the sector that offers millions of job opportunities. Shah also said that fulfilling the goal of ‘Housing for All by 2022’ would become “challenging” if the necessary policy reforms were not announced.

CREDAI President Satish Magar called the announcement by the government a “half-hearted attempt” to restore ailing real estate sector. He said it required bold decisions to support revive the collapsing real estate industry.

The announcement by the government was “disappointing” not only to the industry but also to the lakhs of individuals working in the real estate sector, Magar said.

The president of CREDAI said that the government should “function to resolve the root cause rather than merely announce piecemeal changes that will not have a concrete long-term effect.”

However, Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure, said the government’s decision to provide the affordable and middle-class housing sector with the much-needed last-mile liquidity is a piece of favourable news for the industry.

“This funding for non-NPA and non-NCLT projects would not only arrest the rise in NPA’s but also reduce the overall NCLT & RERA complaints, thus providing customer relief and helping to restore trust in the housing sector,” he said.

Dutt said the residential industry needs more than Rs 3 lakh crore financing and this decision is the first move towards infusing liquidity into the industry.

“We are also hoping that the government will announce steps over the moment to stimulate job creation and confidence, thereby improving sentiments,” he added.