Real estate industry seeks Rs 1.25 lakh crore stress fund for ailing sector

NEW DELHI: The ongoing Covid-19 pandemic has impacted global economies and Indian real estate is not spared from the depths of despair. Hence real estate sector’s expectations from the upcoming Union Budget 2021 are high.

NAREDCO, an industry body, is seeking estimated Rs 1,25,000 crore via many HFCs/NBFCs who they say are ready to establish such stress funds for ailing real estate sector. According to them, this will allow for faster appraisals and sanctions.

“While the real estate industry appreciates the initiative of establishing the SWAMIH fund for Rs 25,000 crore to help real estate sector, allowing more such stress funds will help facilitate the last mile funding for stressed and stalled projects,” said Niranjan Hiranandani, national president, NAREDCO.

Enhancing loan to value (LTV) ratio up to 90 per cent across the board for home loans for affordable houses of Rs- 30 lakh or less and the same facility should be extended to MIG and HIG, is another demand that industry has put forward.

“Allowing interest on home loans for income tax deductions without any ceiling, current interest deduction under section 24 of IT Act 1961 on housing loans of Rs. 2 lakhs should be removed in order to incentivise home buyers.

Bring long term capital gains at 10 per cent (on par with provision of section 112 for equity shares); and reducing the period of holding house property to up to 12 months from existing 24/36 months to qualify as a Long-term Capital asset is need of an hour,” said Rajeev Talwar, chairman, NAREDCO.

“Also, loss from house property should be fully allowed to be adjusted against other heads of income. In case of unadjusted loss, it should be fully allowed to be carried forward to subsequent years,” said Parveen Jain, vice-chairman, NAREDCO.

For rental housing, NAREDCO seeks enhancement in HRA Tax Exemption; an increased depreciation rate for the rental projects like in commercial buildings and allowing ‘carry on’ of loss from rental income will make a difference.

To promote rental housing “The deduction of 30% from the annual rental income (for purpose of maintenance) should be increased to 50%. This will not only improve ROI but will also encourage citizens from investing in residential properties for giving on rent,” said Hiranandani.

Similarly, affordable housing will benefit from increasing completion period to six years; while enabling concessional lending rate for Affordable Housing Projects. Extending the Credit Linked Subsidy Scheme (CLSS) for all segments will support home buyers, added Talwar.

Realtors want the ban on subvention schemes needs to be reconsidered for the direct benefit to the home buyers. Jain said, “RBI and the National Housing Bank (NHB) should reconsider the ban imposed on subvention schemes. The ban is not in favour of home buyers as a large proportion of them do not have the capacity to pay both EMIs on their home loans as well as house rents.”

One-time restructuring of loans, allowing external commercial borrowings (ECBs) for the real estate sector and reforms for special economic zones, including extending notification date for IT/ITeS SEZs and withdrawal of MAT are some other demand put forward by NOAREDCO which thinks this can go a long way in ensuring green shoots in real estate sector.