Factors Required to Give a Push to Affordable Housing in Pune
26 Jul 2016
The budget announcement on allowing 100 per cent deduction for profits to housing projects building homes up to 30 sq meters in the four metro cities and 60 sq meters in other cities is likely to spur supply of affordable homes, demand for which makes for almost 90 per cent of the demand for homes in Pune.
Builders and real estate experts say the exemption for affordable housing projects would bring in a 15-20 per cent upside on profits after paying the MAT tax for a real estate developer building such a project, making it easier for the developer to attract foreign and domestic investment for housing projects.
There has been a lot of rationalization of taxes. Small pain points of the real estate industry like harassment by excise department on ready mix concrete being manufactured on site for self use have been addressed. The enhanced home loan interest deduction will further encourage buyers to invest more in this segment. This will further encourage private participation in affordable housing. Amenities that are offered in some of the existing projects in this segment are very basic. As this has also been an area of concern, improvement in this regard can lift buyer sentiment. With property prices in Pune's city centric locations steadily rising, affordable housing is making its presence in peripheral areas.
Another factor that's responsible for the push in affordable housing is that the government's focus on digitization of land records is in the right direction especially in the rural areas, which will render land records free from encumbrances. The exemption of stamp duty, registration and value added tax (VAT) for the home buyer will definitely boost the sales of affordable housing too. Also it will help in the right pricing of units making them more affordable. The budget has also increased the limit of deduction of rent paid under section 80GG from Rs 24,000 per annum to Rs 60,000, to provide relief to those who live in rented houses.
While areas in the city center have saturated, localities in close proximity such as Undri, Ambegaon,Talegaon, Chakan, and Moshi have emerged as the new centers of affordable housing. Availability of land at relatively lower prices is the key factor that is enabling realtors to develop affordable projects in the city's outskirts.
Affordable housing is the future of the coming generations!