Could you elaborate on the upswing in affordable homes segment? Have you seen a spike in demand for small ticket home loans meant to finance low-cost purchases?
The upswing in the affordable home segment has been led by several path-breaking initiatives undertaken by the Government. One of them is the inclusion of housing loans upto Rs 50 lakh under affordable housing in six main cities and Rs 40 lakh in other cities and bringing loans upto Rs 28 lakh in metros and Rs 20 lakh in other centres under priority sector lending. The decision of RBI to increase loan to value (LTV) ratio to 90% of loans, allocation of Rs 23,000 crore for PM Awas Yojana, the extension of Affordable Housing Programme to 5 years, benefit to be based on carpet area instead of built up area, NHB (National Housing Board) to refinance loans worth Rs 20,000 crore, proposal to complete 1 Crore houses by 2019 for the homeless and those living in mud houses–are the drivers that will boost the affordable housing sector. This credit off take towards affordable housing segment is a positive for both stake holders, the first home buyer and developer.
Could you share your views on the tax benefits proposed by the Budget and other positive developments related to affordable housing? Will they give a concrete fillip to this space?
The Union Budget 2016-17 created a conducive tax environment for developers offering relief on unsold stock. The holding period for capital gains tax for immovable property has been reduced from 3 years to 2 years and a tax break of 1 year post receipt of the completion certificate is offered for unsold stock. These efforts are already making “affordable housing” more acceptable to developers, who are now entering this segment with confidence.
What is the outlook for the affordable housing sector for 2017-18?
India is starved in the supply of affordable housing; the country is taking the right steps towards bridging the huge gap with supply being less than 10% of the demand. The infrastructure status given to affordable housing this year has been a long-pending demand by the real estate sector to boost the volume of construction activity by focusing at the bottom of the pyramid, where growth and potential exists. With government’s determined steps toward financial inclusion, I believe that the industry is well poised to play a defining role to spur India’s economic growth.
Harshil Mehta, CEO, DHFL