Don’t use credit cards like this!

The Union Budget reaffirmed the government’s commitment to prioritise ‘Housing for All’ through affordable housing. By allocating significant funds to ramp up infrastructure, the finance minister has provided a positive fillip to the real estate sector. The measures announced, are aimed to encourage affordable homes, especially for first- time homeowners while also injecting much needed liquidity in the economy.

If you are buying a home for the first time, this would be an opportune year for you to consider investing in a home of your choice. The government extended tax benefits to first time home owners till March 2022, providing an additional rebate of ₹1.5 lakhs every year on home loan interest payments for affordable houses. This will supplement the current ₹2 lakh deduction available and will translate to increased savings on interest payments.

Given that the Budget has also extended tax support to real estate developers, the proposed one-year tax holiday for affordable housing projects, will encourage developers to develop such projects and may also speed up the delivery of such projects. Also the proposed increase of the safe harbour on real estate, is a welcome safeguard for real estate developers from income tax litigation on the sale of property. This will prompt the launch of several affordable housing projects and would also mean that homeowners could be taking possession and shifting into their home, way earlier.

For developers, the announced relief on TDS on REITs and InvIT could boost investments in the sector and provide easier access to funds needed to complete their projects. With the taxability of dividend to be determined by the recipient, this should encourage retail participation in primary REIT/InvIT issues. With the sector strapped for funding post COVID 19 and many projects on hold, this could just be the catalyst needed for completion of such stalled projects.

The minister also highlighted the need for increasing the affordable rental housing for migrant workers and proposed a tax exemption for notified affordable rental housing projects. This is significant as it will ease the pressure on home rentals, making renting a home more wallet-friendly. The move is expected to increase returns on rentals and could just pave the way for housing projects that are focused on leasing rather than outright sales.

Thus, migrant workers can now sustain their homes in metros and move beyond the pressure and challenges of the recent past. While the Budget has been measured in its approach, it provides considerable relief to home buyers and developers in equal measure. It has ensured that both the demand and supply side of the real estate spectrum, have been considered and addressed adequately, to encourage affordable housing.

With these measures in place, 2021 could herald many new purchases and projects in the sector and take the government’s dream of ‘Housing for All’, several steps ahead.

(The writer is co-founder & CEO, BASIC Home Loan. Views expressed are personal)