How Affordable Housing Infrastructure Status Benefits Both Homebuyers and Developers

In order to revive the depression-stricken real estate industry, the 2017 Union Budget featured an announcement that was beneficial to home buyers and developers alike. The finance minister granted an infrastructure status to affordable housing, this measure aims to give a boost to affordable housing. This proposal has been received positively by the real estate industry, directly from middle class home buyers, developers and mortgage loan providers. The ultimate goal of the State of Affordable Housing Sector Infrastructure is to advance the government’s goal of providing housing for all by 2022.

Let’s find out what benefits real estate developers and home buyers will get:

Greater investment in affordable housing:

The 2017 union budget also proposed that NBFC will provide up to Rs 20 billion in individual loans. Affordable housing means the likelihood of great investment opportunities, as home buyers can take advantage of loans at a cheaper rate. Many players and new lenders are expected to emerge from this move as the interest rate falls, resulting in high demand for residential real estate.

Tax exemption for developers:

Developers will get some tax relief. The profits made by the builders will not have to pay taxes during the five years. Tax incentives assigned to infrastructure projects will lead to lower prices. The demand for affordable housing is likely to increase given the extra money people will have on hand due to the proposed 5% income tax rate deduction for taxpayers earning less than Rs 5 Lakh.

The area of ​​the carpet will be counted instead of the built-up area:

The biggest change to the budget was the inclusion of a carpet area, rather than a built-up area. A carpet area limit of 30 square meters will be applied in the case of municipal limits of metropolitan cities, while 60 square meters will be the limit for other countries. This will ensure a spacious home. The carpet area rule is likely to impact construction projects to meet affordability criteria.

Interest subsidy:

Under Prime Minister Awas Yojana (PMAY), the government will provide the 4% and 3% interest subsidy on loans up to Rs. 9-12 lakhs. This is said to provide a good boost to mass housing in the country’s eight metropolitan cities.

Affordable housing has caught the attention of many private equity funds and is also receiving inquiries from foreign investors, even ahead of the 2017 union budget announcement. Equity funds and foreign investors are also expected to increase their holdings in real estate. . Ultimately, the budget has positive measures for developers, consumers and investors.