Budget 2020: Expectations from the Indian Realty sectorBy
Akhila Masapogu, 30-Jan-2020
With days quickly counting for 2020 union budget presentation on February 1, stakeholders from the Real Estate sector are all hopeful for plans and reforms that would positively impact the market. Real Estate is one of the major contributors to nations GDP and is expected to grow in leaps and bounds in the coming years. Continuing the trend of positive initiatives like 25000 crore bailout fund announced last year, Nirmala Sitharaman, the union finance minister is expected to take some major initiatives through this year union budget, aimed at streamlining the sector and giving a thrust to the sluggish growth the sector has seen in the recent past, in continuation.
Some major declarations regarding the taxation, REITs and land acquisition processes are expected to have a place in the union budget of 2020. Decisions helpful for both the dealers and the customers, keeping in mind the major concerns like liquidity crunch, etc., are expected to made by the finance minister.
- Easy liquidity
- Cut down on stamp duty and registrations
- Affordability of land and ease of availability
- Reforms for First time home buyers
- Incentives for investment in affordable housing
- Encouragement to REITS
- Infrastructural development
The union budget 2020 is expected to handle the major liquidity crunch that the Indian Real Estate market is currently staring at. With less and less cash currently available within the sector, it has put the developers and the investors as well, in a tough situation and has become the number one cause of concern. The non-banking financial companies (NBFCs) failed to enthuse fund the real estate developers post IL & FS default causing the absolute liquidity crunch. But this situation is expected to get better, hopefully, with some remedial measures along with fiscal reforms of the Union budget 2020.
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High stamp duty and Registration costs are huge burdens to a common man. Though the government is providing measures and encouraging affordable housing, stamp duty charges are an important thing they need to look into. Sometimes the buyers and real estate investors had to back out just because of the additional costs that they cannot bear for purchasing a house. If not wavier at least rationalizing the stamp duty and registration costs will help the people immensely.
Real Estate development has also led to a significant rise in the cost of land. This is another drawback when it comes to affordable housing as well. Increased land rates are also another major reason that people of the poor and middle class cannot afford the house. The government should take measures to ensure that land costs are also affordable and available in good localities. The Union budget is also hoped to bring this measure to fully promote their goal of Housing for all by 2020, extending the benefits of Pradhan Mantri Awas Yojana (PMAY).
With some appreciable tax implications declared in the last union budget, we are optimistic towards further boast for first time home buyers encouraging affordable housing. The fiscal reforms made in the last union budget of 3.5 lakh deduction on interest paid for home loans of first time home buyers up to 45 lakhs were partially functional with deduction of 2lakh only. Though the delay in the execution disappointed the middle and lower class the first time home buyers the additional deduction of 1.5 lakh is expected to be implemented in 2020. This further is encouraging and beneficial to the home buyers.
With many reforms and plans encouraging affordable housing already in place for achieving housing for all by 2010, this union budget might step a bit up. Rental housing is another important part that impacts affordable housing for all. Giving place for rental housing incentivization in this union budget will positively affect the affordable housing sector as well. With urbanization and population overloading, there is a dire need for developing a rental housing model in 2020.
Real Estate Investment Trust (REITs) has completely changed the scenario of Real estate investments bringing in the structure, transparency, and easy accessibility. REITs have positively impacted the Real Estate sector and improved the fund flows. REITs have revolutionized real estate investment which was inaccessible to many people earlier by bringing a structure and easy process. The union budget 2020 is expected to more reforms to further encourage investors. Also, with RERA in action, REITs as a tool has become a trustworthy investment tool that is going to be promoted and encouraged more in 2020.
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Infrastructural development is an important part owing to the development of the whole Real Estate. The union budget 2020 is to declare a plan to spend 100 lakh crore in the next 5years, which leads to massive development of the sector if executed effectively. With many loopholes at the bottom line of the structure, this sector might need some serious reforms like unique identification numbers and others that further bring in structure and transparency. The massive budget with effective implementation, filling in the loopholes at the basic level hampering the growth will truely lead to significant infrastructural development in the country. Improvement infrastructural development in the country adds up to the economy hugely with increased foreign direct investments and investment from our own country.Union Budget 2020 anticipations have kept the customers, dealers, and stakeholders on their toes. With expectations for a further boost to the Indian Real estate market, this union budget in 2020 hopefully impacts the market positively.
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