People in India were introduced to a new pattern of buying and selling assets after the declaration of the Union Budget 2017 on February 1. Finance Minister Arun Jaitley has made some strong reforms in the real estate sector too. The growing real estate sector was becoming excessively heavier on the pockets of the common men. As part of the process, buying a dream house soon turned into a dream only. A majority of the changes done in the Union Budget are in favor of the citizens. Here is a brief account of the impact that the Real Estate Budget 2017 has had on realty buyers across India.
Affordable Housing Scheme
Union Budget 2017 brings in the much needed ‘infrastructure’ for affordable housing sector. The step truly justifies government’s agenda of ‘Housing for All by 2022’. Developers will get easier access to capital at a relatively lower rate with longer payback period and to VGF (Viability Gap Funding) and tax incentives.
Buyers will get the benefit of paying for a carpet area of 30 and 60 SQM instead of the built up area of 30 and 60 SQM, adding up more space. However, the limit of 30 SQM is only applicable within the municipal boundaries of four metropolitan cities. Meanwhile, the limit of 60 SQM will be applicable on the rest of the country, plus the peripheral areas of the metropolitan cities.
Encourage Rural Housing
The Budget proposes that by the time it is 2019; 10 million homes will be built for the homeless and kutcha house residents. This Act is said to stimulate rural housing sector in India with the allocation of Rs230 billion ($3.4 billion) for Gramin Pradhan Mantri Awas Yojana.
The move helps initiate affordable housing both, in rural and urban areas equally, with the completion of 10 million houses by the year 2019. At present, the housing sector is active majorly in Tier-I and Tier-II cities. However, the scheme aims at servicing not just the poor but also encourage rural residential areas.
Refinance Individual Housing
The National Housing Bank (NHB) will now refinance the procedure of individual housing loans. A surplus amount of cash was registered with banks nationwide as a result of the demonetization drive. Thus, banks finalized the refinance of loans at about Rs 200 billion ($3 billion) in 2017-18, with lending rates lowered.
It is stated that the lowered interest rates are applicable on home buyers with existing flexible housing loans along with new home buyers.
Budget 2017 justifies the schemes planned in favor of ‘housing for all’ with its major reforms in the real estate sector privileging the buyers. However, the cut-down in individual loans may cause discomfort to those who have previously paid higher lending rates before the introduction of Real Estate Budget 2017.