Last Update: January 11, 2023, 3:09 pm
The real estate and home loan industries are expected to be hit hard by the increase in interest rates.
Real estate expert Atul Monga has said that the real estate and home loan sector is an important part of the Indian economy, but it is currently going through a crisis.
After a slowdown during the COVID-19 pandemic, the housing sector witnessed decent growth last year. An Anarock Research analysis claims that residential property sales are set to increase by over 50% in 2022 as compared to 2021. However, the housing market is not expected to do well in 2023. Hence, this time the role of budget becomes important. Budget 2023 can provide relief to the industry by doing little intervention for both buyer and seller.
According to real estate analyst Atul Monga, the real estate and home loan sectors are vital to the Indian economy, but they are currently passing through a difficult phase. This is the result of growing interest; Thus lenders should provide loans with attractive interest rates. Besides this, industry insiders predict 5 other budget announcements that may help business.
tax exemption
The real estate and home loan industries are expected to be hit hard by the increase in interest rates. Buyers are worried about rising interest rates. The government needs to take steps like increasing the tax exemption on housing loan interest to Rs 5 lakh under section 24(b).
Changes in home loan rules
Anuj Sharma, chief operating officer of mortgage finance company IMGC, says interest rates should be brought down to make home loans more affordable. Even though loan rates are determined by RBI’s policy rates, he said the budget could help homebuyers by relaxing some norms, such as reducing the minimum down payment requirement.
Change in Affordable Housing Limit
Experts feel that the current price band of Rs 45 lakh for a property considered under affordable housing is not justified in most cities in India. It should be raised to Rs 75 lakh or more.
Relief in GST
The current GST structure for affordable and under-construction homes puts additional burden on developers, thereby increasing the price of units for buyers. Though there are 18% and 28% GST on steel and cement, developers cannot claim tax credit for GST paid on input materials. Experts said if the government includes a statement restoring input tax credit in this year’s budget, it could ease the financial pressure on developers.
rental housing
According to Anil Pharande, chairman of Pharande Spaces and CREDAI Pune-Metro, the Indian rental housing sector is still in its infancy. By providing tax benefits to developers who are building rental housing developments, the government can give a boost to this sector.
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