Budget 2019: 'Government needs to introduce efficient methods to finance land procurement by developers'

Real estate developers have urged Finance Minister Nirmala Sitharaman to introduce some extra tax sops and incentives for homebuyers, especially in the affordable housing segment. At a time when the NBFC crisis seems to be unabated, the government needs to re-examine or introduce efficient methods to finance land procurement, by developers, which currently is misaligned, say industry insiders.

Ramji Subramaniam, Managing Director at Sowparnika Projects said, "During the first term of the Modi government, the country witnessed a transformation of the real estate sector with the biggest move being towards an organised sector. The introduction of the Real Estate Regulation Act (RERA), GST, and significant thrust into the affordable housing sector through “Housing for All by 2022”, have paved way towards the overall growth of the sector. These reforms have also led to greater transparency, accountability and regained the trust of homebuyers and investors in the sector."

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Elaborating upon the interim budget Subramaniam said that the interim budget witnessed the introduction of tax sops for the homebuyer, which further enhanced the viability of investing in real estate. Moreover, incentives for homebuyers purchasing homes under affordable housing, have helped revive the interest amongst the various income groups in urban India to purchase homes; at the same time, a renewed interest by realty players in the affordable segment has helped reduce the ratio of sold to unsold inventory in the country.         

"The Budget of 2019 under Modi 2.0 should offer a carefully assessed approach to rationalise input costs, that can benefit both the real estate developer as well as the homebuyer. At a time when the NBFC crisis seems to be unabated, the government needs to re-examine or introduce efficient methods to finance land procurement by developers, which currently is misaligned. Additionally, the Government must formulate methods to reduce the cost borne by the developers during the preconstruction phase, especially with land procurement and during the pre-RERA phase, so as to increase the cost feasibility of an affordable housing project,” said Subramaniam.