With infrastructure being mounted in this Union Budget 2021, it is an optimistic expenditure at the outset; the CAPEX, Finance Minister, has gone all out regarding health care, irrigation, housing, railways, highways and small and medium-sized enterprises. Affordable housing projects are likely to be improved and are on priority respecting the announcements made by Finance Minister Nirmala Sitharaman for the segment.
Fin Min has initiated a one-year extension to 31 March 2022 of the Rs 1.5 lakh gain on interest charged on affordable housing loans. This rose by one year from March 2020 onwards until March 2021 last year. The affordable housing developments are entitled to a credit under Section 80IBA of the Income Tax Act. The FM has provided additional tax deductions for subsidised rental housing projects to offer rental housing for migrant workers.
“Union Budget initiatives will help to encourage affordable housing projects. The study by ANAROCK states that approximately 60% of the country’s housing transactions are in this category. The numerous investments planned by the FM in sectors such as metros would also help real estate infrastructural developments, says Mr Gaurav Gupta, Director, SG Estates Pvt Ltd.
Also, as forecasted, affordable housing and rental housing were significantly boosted by the Government extending the period for an additional deduction of Rs 1.5 lakh eligible for loans until 31 March 2022. This will hold up demand for affordable housing in 2021 as well. The continuation of the tax holiday for affordable housing initiatives for a further year would help bring more additional supplies to this section.
According to Anarock Study, affordable housing now accounts for more than 35% of the supply in the top 7 cities.
The demand for affordable housing is healthy and there will be more movement in the coming months. People have understood the value of buying a home, and that feeling is going to continue. Despite lower-than-normal sales in the real estate market, the affordable category has emerged as a hot cake for prospective homebuyers. Post-Unlock, the segment encountered an increase in the number of visitors to the project sites, and the properties sold directly first as a result of the pent-up demand and the realisation of people to buy their houses.