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As the budget time for the current financial is just a week away, the noises from different sectors asking for various sops to bail them out amidst recession times are getting louder. One of them, asking for some favours from FM, is the real estate sector. The real estate sector, hard pressed for liquidity and lack of interest from genuine buyers, has put forward its demand through CREDAI and NAREDCO, the two apex bodies overlooking such issues. Naredco (National Real Eestate Development Council) and Credai (Confederation of real Estate Developer's Association of India), have apprised the need for extension of debt rescheduling plan and infrastructure status for some projects. The ministry of housing has further put across these demands to the finance ministry for considerations in the forthcoming budget.
The present provisions, which allow a developer for one-time restructuring of debt, will be over by the end of this month and the developers want the scheme to continue till 2011.
Naredco has further sought infrastructure status to projects having residential units of 900 sq ft or less. This will ensure a wider finance window for these projects. As a safeguard a developer may be required to build at least 100 residential units in all such projects.
As an incentive for smaller housing units, the NAREDCO has also sought a dedicated fund for affordable housing. It also wants the sale of properties to an NRI (non-resident Indian) treated as exports. The present provisions consider sale of property to an NRI as normal sale.
A majority of real estate developers are pushing for a renewal of Sec 80 IB. This gives tax waivers to a housing unit built in less than 1,000 sq ft to the developer building the same. The demand is mooted as an incentive towards the construction of small and affordable houses. The concession was available before 2007. Naredco also wants the exemption limit on the interest towards home loan be increased to Rs 3 lakh from the Rs 1.5 lakh.
The demand list further mentions that an access to long term funds such as provident, insurance and pension funds will help ease the liquidity situation for the realty sector and help the government in its objective to provide housing to all.
Credai, on its part, asked for bankers support to completion of ongoing projects. It further pressed for allowing a developer to avail overseas funds through external commercial borrowings (ECB). At present, ECB is prohibited for housing development. ECB in housing construction will be supplemental to the funds from banks and financial institutions and in the long term will reduce the cost of finance thereby reducing the price of houses in the country, according to CREDAI’s pre-budget memorandum to FM.
It may be highlighted that real estate developers have been facing a lean period for the past three years, and a majority of them have been forced rework their strategies to move to affordable housing. Some of them have even slowed down on the construction of the already launched projects, due to lack of funds.
Amit Jain