On the first day of February 2018, Finance Minister Arun Jaitley has delivered the last budget of this tenure of Central Government by facing passive economic development, challenging economic situation and farm distress. This budget is not only important for the citizens of India but also important for the Central Government because of the upcoming elections in the 8 states in 2018 and General Election of 2019. Let’s take a look that how Financial Minister has managed the balance between the expectations of the common man and need to support economic growth.
If you talk about real estate, then in 2017 Central Government has introduced two major reforms like RERA & GST which are like the turning points for Indian Real Estate Sectors in many positive ways. With the execution of the Real Estate (Regulation and Development) Act (RERA), the residential property in India, especially Residential Projects in Gurgaon is witnessing major changes. The Act exactingly prohibits builders from advertising their fake promise in their residential & commercial projects, while giving the freedom to attract buyers for developments that have Occupancy Certificates (OC) ready.
With these new rules, home buyers can invest in residential projects without any fear of fake promises and now real estate also gaining the more & more interests in residential projects, especially in the new or upcoming regions and Residential Projects Sohna are the best example of this good demand.
What for the Infrastructure & Real Estate in 2018 Budget-
- India needs investment of Rs 50 lakh crore in the infrastructure sector
- Construction of new tunnel in Sera Pass to promote tourism
- Out of 100 smart cities 99 cities have been selected, with an outlay of Rs 2.04 lakh crore
- 10 prominent tourist sites will be made iconic tourist destinations, with an amalgamation of private funding, marketing and branding
- Bharatmala project: To develop 35,000 KM under phase 1 with an outlay of Rs 5.35 lakh Crore
- Govt to introduce pay-as-you-use system for toll payments
Maybe 2018 budget influenced by the political pressure with a major concentration on agriculture and farmers, but there is something special for the affordable homes, which has content the real estate sector and make 2018 Revolutionary Year for Real Estate.
In this event, Finance Minister said, “My Government will also set up a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector providing shortfall and fully serviced bonds approved by the Government of India.”
He also added that “a long way from the Benami properties earned by bribery & corruption, the common man only looking for have a roof, a small home by his earning of honesty. We are just serving them so that they may fulfill the dream and can buy their dream home. We have set a target that every common man of India may have his own home by the end of 2022. For this reason, Pradhan Mantri Awas Yojana has been launched in different big or small regions of the country. Under this initiative of Central Government, 51 lacs homes in the year 2017-18 and 51 lacks homes during 2018-19 which is more than approx one crores houses will be constructed only in rural areas. In metropolitan regions, the assistance has been sanctioned to build about 37 lacs homes.”
A Chief Business Officer of leading real estate online portal commented, “The real estate sector appreciates & welcomes the scheme of setting up of a dedicated fund for affordable homes. This will facilitate create more affordable housing supply as well as boost the demand from actual middle-class end-users.”
According to the real estate experts - “With the budget of 2018, the Central Government continues to boost the affordable homes sector by setting up an affordable housing fund under the umbrella of the Pradhan Mantri Aawas Yojna, which will give force to the growth of industries subsidiary to the property sector. As well as, the relaxation of income tax adjustment in case of difference of less than 5% between the circle rate and consideration for real estate acquisitions is an acceptable change. The real estate industry is, on the other hand, dissatisfied with no alterations in income tax slabs or GST slabs, translating to no extra advantage to new home buyers particularly in big cities.
The budget has given a big respite by allowing up to a 5 percent gap between the two and this has the perspective to eliminate the irritant and revitalize secondary market dealing and also help increase demand for the new residential project.
After the Demonetization of 2016, the secondary market of real estate witnessed a bit of instability because of the lack of liquidity. As well, in the big cities, the circle rates were increased and had become more than the market value. This caused a gap amid the two rates, which was counted as income in hands of both buyer and seller.