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Big Real Estate “Re-set”Opportunity After Covid-19

Real estate can bring a lot of good news is that there is a bottomless demand for housing and real estate of all kinds at a “Affordable Price Point” i.e., in the MID INCOME segment. Policy makers and governments have thus far focussed on “Low Income” and “EWS” housing only, leaving behind MID Income housing, commercial office and retail space and also industrial real estate. This approach has not borne any great result and this also has been difficult for private industry to cater to due to a series of issues starting from expensive land to building bye-laws, financing system etc., and can only marginally impact the economy at large.

Government should allow 100% deduction of any money paid (capital and interest) to buy first house by any individual from income. The current deduction is only up to 200,000. Many individuals will cross over from rent to buying a 2 bhk flats in ahmedabad as if such deduction is given. There is already an inventory of 4.5 lakh homes and this can be one of the schemes where a solution for such large inventory can be found. Also this will go a long way in fulfilling the dream of ownership of house to one and all.2. Housing loans should be provides at the “repo rate + 1% spread”. This will benefit the customers and the entire industry will kick start and will give a big push to the economy in general. These loans should only be given to developments that procure 90% of the items by value from India.3. Real Estate specially buy new housing should be bough under GST and there should not be any double taxation. Currently a home buyer pays GST and also Stamp duty. This makes house very expensive and these prohibitive transaction costs affect the industry and economy negatively. Before GST, the stamp duty was in the range of 5 to 7%, now there is an additional burden of 12%. This is highly unjustified. While GST reform may take time, there should be immediate rationalization of stamp -duty and “Circle Rates”. It has been observed recently that state governments have very high stamp duty rates and also “very high circle rates” in some areas. Transactions are therefore recorded at that rate, irrespective of the transaction price. If rates of stamp-duty are brough down, there will be more transactions recorded at the actual price and the revenue to the exchequer will actually increase. In our view the stamp duty should not be more than 2% and we should also work to having an e-registration to cut down the red tape in the court of registrar.4. India is one of the few economies in the world , probably 15, where there is “GST on rent”. This is a very draconian taxation. It limits investment in commercial real estate and poses a burden on the investors and occupiers of real estate. GST should be levied only on the maintenance of services in the building.5. To reboot the economy, all construction projects that are stuck should be started again and only if these projects are brought in line by direct central government funds. This will not only given employment and much needed infrastructure, it will make India an attractive investment destination the need of the hour.

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Written by Kritika

I am passionate blogger and write about real estate industry like 2 bhk flats in ahmedabad, 3 bhk apartment. I love to write about new update in the real estate industry. This is my website

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