A series of recommendations sent to the India government in the run up to the Union Budget, emphasize the need to expand this sector of the real estate industry which could add 1 to 1.5% to gross domestic product.
The Confederation of Real Estate Developers' Association of India says the government should take the lead. Although some developers are moving into providing more low cost property, it is not sufficient, says the real estate industry organisation.
'We appeal to the government to create an impetus and facilitate affordable housing,' said President Santosh Kumar Rungta. He called for it to be put at the centre of public policy.
The organisation wants fiscal incentives for encouraging affordable mass housing in the 300 to 600 square foot and up to 1,000 square foot segments, by providing subsidy in interest payable by the property buyer.
It is estimated that there is an urban housing shortage of 24.7 million units almost all of which is in economically weaker sections and lower income groups. 'Property ownership is critical for this segment not only for economic reasons but also for the health of the nation from a social perspective in terms of stability, law and order, education and employment,' Rungta added.
Secondly CREDA wants direct and indirect taxes to boost slum re-development and this will in fit in with a governmental pledge to make urban India slum free in five years. It also recommends increasing deductions on interest paid on self-occupied residential property as amounts were fixed six years ago and real estate prices have increased massively since then.
The industry body also believes that incentives should be given to senior citizens for purchase of flats for themselves and also to children who purchase residential units for their aged parents. It recommends a 100% interest deduction on home loans taken out by senior citizens or by their children if they opt to buy a second home in the joint name of parents who are over 55 years old as well as no capital gains tax for senior citizens/their children on sale of these residential units.
It is a chance for the government to boost the professionalism of the industry as well, according to Koshy Varghese, Managing Director of Bangalore based developer Value Designbuild.
'The property sector must be given the status of an industry thereby allowing access to cheaper credit and easier access to loans. Bank finance is still very expensive,' he said.
