Affordable housing continues to be the main focus of the government in the real estate sector, with finance minister Arun Jaitley on Thursday announcing a dedicated housing fund under the National Housing Bank.
Reiterating that the government aims to ensure a house for every poor person in the country by 2022, Jaitley proposed in his budget speech to construct more than 1 crore houses in rural areas under Pradhan Mantri Gramin Awas Yojana. In urban areas, assistance has been sanctioned to construct 37 lakh houses, he said.
The government had launched its ambitious ‘Housing for All’ scheme focusing on the urban poor in 2015. The Pradhan Mantri Gramin Awas Yojana for the rural poor was launched in 2016.
Under this scheme, the government had a budget outlay of Rs 27,505 crore for financial year 2018-19, which is less than the revised estimates of Rs 29,043 crore for 2017-18.
New fund
The finance minister said the government will establish a dedicated affordable housing fund under the National Housing Bank. Its corpus will be sourced from the shortfall arising in priority-sector lending and fully serviced bonds authorised by the government.
“The focus of the government continues to be its mission of Housing for All by 2022, reflected in a dedicated affordable housing fund to be formed under the National Housing Bank,†said Ankur Dhawan, chief investment officer at realty portal PropTiger.
Jaitley also said that the National Housing Bank Act, 1987, is being amended to transfer the lender’s stake from the Reserve Bank of India to the government.
Circle rate
Jaitley also proposed a tax relief for buyers and sellers of property. He said that if the circle rate for a property does not exceed 5% of transaction value, no adjustment is required towards the capital gains on a transaction.
The circle rate is the value of a property fixed by local revenue authorities.
“This will help in terms of some extra savings if there is parity between the market rates and the ready-reckoner rates. Cities which are not under the heavy influence of real estate investors and where prices are rational may benefit from this announcement,†said Anuj Puri, chairman at ANAROCK Property Consultants Pvt. Ltd.
Jaitley said the government and market regulators have taken necessary measures to develop monetising vehicles such as infrastructure investment trusts and real estate investment trusts in the country.
He also said that logistics parks are included in the harmonised list of infrastructure, for which the government’s estimated budgetary and extra budgetary expenditure for 2018-19 is being increased to Rs 5.97 lakh crore against the estimated Rs 4.94 lakh crore for 2017-18.
PropTiger’s Dhawan said the government’s focus on infrastructure creation is another indirect benefit to the real estate market.