What The Budget Should Do For Home Buyers

Kishor Pate

Real estate stakeholders in every Indian city are looking forward to the upcoming financial budget 2015 to see whether it will provide any relief to the sector.

Developers have their own expectations, because positive announcements for real estate buyers made during the budget will help increase the market sentiment, and therefore sales.

The general hope is that the budget will provide cheer to intending home buyers who have been deterred for various
reasons.

Make Home Loans Affordable

The Union Budget 2015-16 should make the rate of interest specific to home loans more reasonable. Currently, banks are offering interest rates ranging between 10.15-10.40%, and this is far too high. Paying so much interest has serious implications on the family budgets of most middle-class wage earners. It is not surprising that many of them currently shy away from home loans.

The budget should bring the interest rate on home loans down to between 7.5%-8.0%. The new government has clearly stated that it wants to make Housing For All Indians a reality by 2022. It is impossible to achieving this goal if home loans do not become affordable to all, as well.

Additionally, the home loan interest amount exemption under Income Tax benefit should be increased from the existing limit of 1.5 lakh to 3 lakh. Further, this exemption should be made applicable for more than single property purchases.

This is not an unreasonable expectation. In the current times and in many cases, a single home is not enough to accommodate all family members. The finance ministry should take due note of this fact and accordingly provide relief for both first home and second home buyers.

Eliminate Multiple Taxation On Property Purchase

The budget should also do away with the multiple taxes involved in the purchase of residential property. As of now, home purchasers are required to pay service tax and value-added tax (VAT) on top of stamp duty and registration charges. Goods and Service Tax (GST) should be introduced in the place of these taxes.

Also, the real estate industry expects the Budget to finally make the Real Estate Regulatory bill a reality this year, so that the industry has the benefit of an apex body via which all concerns can be addressed transparently and efficiently.

Reduce Cost Of Property Registration

Another expectation from the Union Budget is a reduction in the cost of property registration. The recent hike in ready reckoner rates in Maharashtra has been a sentiment setback for the real estate sector. Stamp duty and registration costs are as high as 6% in most cases, and this needs to be reduced by a few base points to aid consumers.
Alternatively, a slab-based approach should be introduced. Stamp duty falls under state government purview, but the Center can nevertheless issue a directive to reduce stamp duty costs.


-Kishor Pate
CMD- Amit Enterprises Housing Ltd.