Finance Minister Arun Jaitley in the Budget 2017-18 has given one of the much needed thrust to the Indian real estate sector. The minister announced that the ‘Affordable Housing’ will be given ‘Infrastructure’ status, which is likely to result in increased participation from private players. The announcement of affordable housing being given Infrastructure status is a welcome move and will act as a catalyst to meet the objectives of ‘Housing to All’ by 2022. The demand for affordable housing in the country is huge. Moreover, the interest shown by a number of large corporate groups in this division is likely to facilitate timely delivery of projects, which remains a nagging issue in the realty sector. Consequently, buyers in this segment may not have to wait indefinitely, like their counterparts in other segments. Credit off-take towards affordable segment of housing will lead to creation of supply especially for both stake holders the first home buyer and developer who will now have access to cheaper funding. Also affordable housing sector will be more lucrative for the builders and also attractive for the buyers. The Budget also offers tax incentives for affordable housing based on carpet area and not built-up space, which will help buyers get bigger-sized homes.
One of the key demands of the real estate sector has been to get an industry status to get the benefit of preferential and lower borrowing rates from banks. The granting of infrastructure status will surely provide ample push for the affordable housing sector in India. The government had already announced a subsidy scheme for first home buyers, therefore lower cost of borrowing for home buyers as well as developers will surely help the affordable housing segment. By granting infrastructure status, the government has acknowledged that the affordable housing industry is an important driver of the economy. Affordable housing developers will now be eligible for several government incentives, subsidies, tax benefits and most importantly, institutional funding.
It will help the sector to get the benefits of infrastructure sector, which was a long-time demand of the realty industry. The new measure will reduce costs for developers and attract more investors. It is a great push for the ‘Housing for All’ vision and will definitely benefit first-time buyers.