The market appears to be improving, with lease activity picking up in the top seven cities in 2021. Many offices already have opened, and many more are expected to start soon. As a result, this is an excellent moment to invest in commercial real estate.
Union Budget 2022-2023: What Can Real Estate Homebuyers Expect?
Real estate investors and homebuyers can expect to have more purchasing power this year. As the real estate sector goes through a difficult period, the government has implemented structural reforms and incentives to help the sector and development firms.
The Union Budget 2022 is nearing, and market speculation is wild about what the government will say in the budget. On February 1, 2022, the Finance Minister of India, Nirmala Sitharaman, will introduce the Union Budget 2022-2023.
The last two years have been unpleasant for practically everyone, but the real estate market has taken the brunt of the damage. So, what is the real estate expectation from the Union Budget 2022? As Finance Minister Nirmala Sitharaman prepares to unveil the Union Budget 2022-23, the real estate sector has several expectations from the government. The real estate industry expects the government to go above and beyond the usual expectations in the 2022 Union Budget. To go above and beyond the single-window clearance and industry status. The sale of housing units fell by 60% in 2020, with only 1.38 lakh units sold. However, the real estate market experienced a strong rebound between July 2021 and September 2021. At the same time, the market anticipates strong growth in 2022 if the third wave of COVID has no impact. Everyone is waiting to see what the finance minister has in store for the real estate market in Budget 2022. Some market experts believe that this market can aid in the creation of jobs and economic growth.
What is the current scenario of the Indian real estate sector?
2021 is the Year of Recovery to real estate industry analysts since demand soared between July and September. If the third wave of coronavirus infection does not affect the recovery process, growth momentum gets predicted to stay unchanged in 2022. Real estate developers expect Residential properties, ready-to-move-in residences, and luxury homes to be in great demand. Other elements that will help include new-age property websites that offer services. These services are a virtual tour of a property, digital payment integration, online rent agreements, online booking of packers and movers, property management, and so on. These reasons are also helping NRI investors. It gets expected that if state governments lower stamp duty or circle rates, demand will increase. A low-interest rate on a house loan, an extended deadline for government housing projects, and making the entire purchase process more convenient are a few more assumptions that will lead to development.
And, what are the homebuyers’ expectations from the Budget 2022-23 for the Real estate?
Every year, market participants anticipate the budget announcement. Every year, some of them get met. But others do not get met. Let us look at the Budget 2022 expectations of the real estate sector, homebuyers, and market experts for the real estate market from the Budget 2022.
- TAX REFUND FOR HOME LOANS: The real estate industry expects the government to go beyond the typical single-window clearance and industry status. End-user appetite must get revived through focused demand-side strategies. Personal tax relief through tax rate reductions or altered tax slabs is urgently required. More tax breaks and lower interest rates on house loans would entice more homeowners and investors to purchase the property. The present tax exemption on home loans should boost buyer sentiment. There is a particular need for income tax exemption on a second property, which will help purchasers while also stimulating the real estate market.
- PROPERTY DEVELOPERS MUST GET A GST CREDIT: There is also anticipation on input tax GST credit for developers, reductions in stamp duty in various states, and registration costs that make a significant difference in the price of a project, all of which will raise house buyers’ attitude and encourage them to acquire property.
- AFFORDABLE HOUSING MUST GET REDEFINED: At the moment, affordable housing gets determined by the size of the home, its price, and the buyer’s income. For example, affordable housing is a unit with a carpet area of up to 90 square meters in non-metropolitan cities and towns and 60 square meters in large cities, with a price tag of up to Rs 45 lakh for both. The central bank’s definition, on the other hand, is based on bank loans made to individuals to develop homes or purchase flats. However, the government should carefully consider adjusting city-specific price criteria to include more consumer base in the advantages given to this sector. The real estate sector has also urged the government to redefine affordable housing to Rs 50 lakh-Rs 60 lakh. It will broaden the advantages for homebuyers and hence increase end-user demand. The price revision will also ensure more homes fall under the affordable price range. Thus, it allows more purchasers to take advantage of perks such as lower GST rates of 1% without ITC, government subsidies, and a total tax deduction of Rs 3.5 lakh on home loan interest payments.
- DEDUCTION FOR PRINCIPAL PAYMENTS ON HOUSE LOANS: A separate provision enabling deduction of principal payments (now part of the 80C deduction) up to Rs 2 lakh will give homeowners more tax benefits towards the end of the loan term. It might be a timely respite in the current situation, as some homebuyers struggle to meet financial obligations.
- INPUT TAX CREDIT TO USE TO LOWER DEVELOPERS TAX BURDEN: There is a 5% GST on under-construction residential units and a 1% GST on affordable housing currently, but no ITC. On finished units, no GST gets levied. The GST on cement and steel is 28% and 18%, respectively, and the tax bill has risen in tandem with the growth in commodity costs. Because developers cannot claim tax credits for GST spent on input products, this amount is added to the building cost, raising apartment prices for homebuyers. Furthermore, it defeats the aim of GST, which was to eliminate the cascading effect of taxes. If ITC is permitted, the tax savings will be significant, allowing developers to cut their pricing. The government might utilize this budget session to allay these fears and guarantee the return of ITC in the future GST council meeting. The government could also consider lowering the GST rate on cement to stimulate the building activities of the economy.
- EXTENSION OF BENEFIT UNDER SECTION 80EEA: This incentive, presently available for house loans sanctioned through March 31, 2022, may be extended until March 31, 2024. First-time homebuyers will continue to profit from this. This tax break will significantly increase demand, given that most home buyers are in the lower and middle-income brackets. It will considerably help first-time homebuyers, who will benefit from the interest subvention of the CLSS scheme and the extended tax advantages at a time when house loan interest rates are at an all-time low and developers are providing attractive bargains.
For the past few years, the real estate business has fared admirably in the face of the epidemic. Growth gets expected. But nothing can get predicted now that the third wave is wreaking havoc on the county. The Finance Minister will propose the budget in a few days, and realtors have specific expectations from the government to restore the market. Expected changes include GST reductions, a rise in home loan interest deduction for a tax rebate, infrastructure designation, project deadline extensions, and more. Everyone understands that the budget is typically a mixed bag for each industry, but the real estate sector, homebuyers, and developers continue to expect stimulus measures. Overall, the government is expected to propose significant initiatives that will benefit homebuyers and developers to support long-term growth in the real estate market. Assetmonk is an online platform that offers real estate investment choices with IRRs ranging from 14 to 21 percent across Hyderabad, Chennai, and Bangalore. We provide three product categories: Growth, Growth Plus, and Yield. See us and learn more about our goods and services.
Union Budget 2022-2023 FAQ'S:
Budget 2022 will be announced and presented on the 1st of February, 2022.
The expectations of the real estate sector, homebuyers expect from the government in Union Budget 2022-23 are as follows:
- TAX REFUND FOR HOME LOANS
- PROPERTY DEVELOPERS MUST GET A GST CREDIT
- AFFORDABLE HOUSING MUST GET REDEFINED
- DEDUCTION FOR PRINCIPAL PAYMENTS ON HOUSE LOANS
- INPUT TAX CREDIT TO USE TO LOWER DEVELOPERS TAX BURDEN
- EXTENSION OF BENEFIT UNDER SECTION 80EEA